The Maltese lower court of appeal has found in favour of a former client of Continental Wealth Management (CWM) and upheld an earlier decision that STM Malta Trust Company pay compensation.
It follows three similar cases that International Adviser reported last week – one of which involved STM and two others related to Momentum Pensions Malta.
All revolve around investment advice given by CWM, which was an unregulated firm.
Retroactive application
The trustees argued that they are being unfairly penalised by the retroactive application of legislation.
In 2019, rules were introduced requiring product and service providers to verify the regulatory status of investment advisers.
CWM collapsed in 2017 – two years before this was a legal requirement.
But the appeals court agreed with the complainants that they had a higher duty to act in the best interests of their clients, whose portfolios were heavily weighted to structured notes.
STM now has to pay 70% of the losses incurred by the client.
More to come?
In July 2020, Momentum Pensions Malta was ordered to pay compensation to 55 former clients of CWM.
The company appealed and, to date, has lost two of those cases – leaving 53 outstanding.
It is not clear how many further cases, if any, STM Malta Trust Company is waiting to learn the outcome of.
International Adviser has reached out to STM for a comment on the latest case.
