Frozen Zenith investments transferred to new firm, but stockbroker says choice is biased

Clients that held investments with Zenith Finance Limited will be able to transfer their assets to CiliaFormosa Financial Advisors Ltd after the group was placed under a freezing order last year.

Hector Spiteri, the court-appointed administrator for Zenith Finance, told clients last week that their assets could be released by way of a transfer of holdings to CiliaFormosa Financial Advisors Ltd.

To transfer their assets, clients must provide their consent by signng a Client Authority Form and sending it to CiliaFormosa by 15 May. Clients who prefer to transfer their assets to another provider can do so, subject to court approval, by providing signed instructions and their preferred advisor’s details to Zenith by the same date.

Last year the court appointed an administrator to take command of Zenith Finance after the company’s owner Matthew Pace and director Lorraine Falzon were charged in court over money laundering.

At Zenith, formerly MFSP, Pace personally handled the accounts belonging to Adrian Hillman and Keith Schembri, both accused of receiving kickbacks from the sale of a printing press to Allied Newspapers.

Police had described Pace as a “professional money launderer” during a court sitting. 

The stockbroker Paul Bonello, of Finco Treasury, told MaltaToday however that Zenith’s clients suffered a further 13 months since the March 2021 freezing order, having been unable to withdraw their monies or change portfolios to better manage their investments.

“It is true that the Court approved the transfer of Zenith’s client portfolio to Cilia Formosa Financial Advisors but this is only because the court-appointed administrator, Hector Spiteri, only proposed this investment services firm in his application to the Magistrates’ Court,” Bonello said.

He said Spiteri had decribed Cilia Formosa Financial Advisors founding partners Josman Cilia and Rodian Formosa as enjoying “wealth of experience” in investment, in a letter he sent to Zenith’s clients.

“Evidently, Mr Spiteri, for some reason or other, did not do his own due diligence. Josman Cilia and Rodian Formosa used to work as financial advisors at GlobalCapital Financial Management, the same company where the four founders of MFSP Financial Managmement used to work at before founding MFSP,  which later changed its name to Zenith.

“If  the court-appointed administrator, Mr Micallef, had done his research, he would have discovered the two persons mentioned were the advisors involved in various cases of investment misselling against GlobalCapital Financial Management.  There have been at least six cases that have been decided by the Arbiter for Financial Services, confirmed by the Court of Appeal, and other cases that were decided by the First Hall of the Civili Court.”

Bonello accused Zenith’s administrator of being biased in favour of Spiter’s own personal preferred selection. “Clients of Zenith who prefer other investment services firms will now suffer a delay as renewed applications to the Court will have to be made,” he siad.

“This is no way court-appointed administrators should treat sovereign citizens of the EU where freedom of choice, amongst those licensed, is paramount in the provision of professional services. Mr Spiteri, as a person appointed by the Court, ought to have sought approval from the Court for the transfer of portfolios to any investment services firm licensed by MFSA.

“Where is MFSA as the statutory guardian and promoter of ‘fair competition practices and consumer choice in financial services’?”