La Valette fund investors file complaint with Financial Services Arbiter

First order of the day for newly-created financial services arbiter as La Valette property fund clients file complaints for restitution of monies they lost in fund

Paul Bonello
Paul Bonello

Finco Treasury Management, the stockbrokers who led a successful campaign to recoup millions in lost savings for Bank of Valletta fund investors, has filed its complaints to the newly-created Financial Services Arbiter.

The complaint relates to the long-running dispute investors have had with La Valette Funds SICAV, its fund manager Valletta Fund Management and the fund’s custodian Bank of Valletta.

Complainants consist both of investors who had received €0.75 per share in June 2011 as well of others who had received an additional €0.25 in January 2013.

Shares in the property fund had been bought at prices of up to €1.1650 per share, besides an initial charge of 4%. All investors claim not to have been correctly restored to their former financial position despite the fund having not been managed in accordance with the fund’s prospectus.

“The investment restrictions in the prospectus meant to impede the fund manager from making speculative and very high risk investments… [this was] manifestly, repeatedly and continuously breached in respect of the larger part of the investments made by the Fund, causing the Fund’s massive losses,” Finco partner Paul Bonello said.

“BOV as custodians had repeatedly issued reports to investors for successive years in which they wrongly confirmed that the fund was being managed in conformity to the prospectus.  These allegations were confirmed by MFSA which also imposed record fines against BOV and VFM.  The latter did not appeal the sanctions,” Bonello said.

Bonello said he looked forward to BOV’s full cooperation in the dispute, “rather than overt and covert moves to undermine the process.”

Indeed he quoted comments from John Cassar White, BOV chairman, who in December 2014 said he supported the office of an independent arbiter who could mediate in the dispute. He said: “I promise that if a legal mechanism is created to re-examine the complaints, the bank will give its full cooperation to whoever is appointed legally to examine these cases.”

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