Issue link: https://maltatoday.uberflip.com/i/814533
maltatoday, SUNDAY, 23 APRIL 2017 News 13 facets of the Company's business as a regulated entity." Temple also failed to maintain an adequate internal control environ- ment and for a number of months, the company relied heavily on one person, for both portfolio manage- ment and risk management – "a situation that was untenable given the manifest conflicts of interest that arose," the MFSA said. Among the breaches, Temple was said to have not cooperated with the MFSA in an open and honest manner, had numerous reporting failures, failed to formulate fore- casts and analysis of illiquid assets, due diligence of investments, and did not ensure measures to avoid conflicts of interest. The regulator added that senior management had failed to take nec- essary decisions when the arrange- ment made by Temple for the man- agement of conflicts of interest was not sufficient, and did not notify investors of the conflict. The MFSA's decision to cancel the company's licence shall not be- come operative pending an appeal, and only when the financial ser- vices tribunal dismisses the appeal. The reason Falcon Funds turned into a national scandal in Sweden is because the SPA believes the pen- sion fund benefited from an irregu- lar transfer of savers' cash during a merger of funds. The trail of bread- crumbs led to Emil Ingmanson, who in November 2013 represent- ed Falcon Funds in talks with the SPA to market its pension funds. Ingmanson, who owns a Sliema property, wanted to open his own investment copany Falcon Asset Management, which had its ad- dress at Temple Asset Manage- ment's offices in Floriana. have been, of Ingmanson's interests in the investments he was proposing, and invested monies [from the pension fund] without revealing his conflict of interest to Falcon Funds, deceiving the company with a lack of full, honest, transparent information," Falcon said. But Temple Asset Management – now facing total suspension from the MFSA – accused Falcon Funds of be- ing well aware that Ingmanson wanted to take over the fund's investment deci- sions. "Ingmanson was the promoter of [Falcon], had an intimate working re- lationship with the plaintiff company and both of them used to work together way before they were introduced to [Temple]," the company said, painting a different picture from that alleged by Falcon. Temple said in its reply to the lawsuit that the actual relationship between the two parties "was intimate indeed, to the extent that the said Ingmanson would regularly attend nearly all board meet- ings of the plaintiff company as a guest." It said Falcon Funds' directors actu- ally planned to allow Ingmanson to take over investment decisions once his company Falcon Asset Management (FAM) obtains an MFSA licence. Of note is that FAM's directors at the start included former Bank of Valletta chief executive Tonio Depasquale, with ultimate ownership being vested in an Isle of Man company. This would have meant that Ing- manson – who acted as a key promot- er of Falcon Funds in Sweden – also controversially planned to take over the pension funds' investment deci- sions. Temple said that FAM always in- tended to take over investment deci- sions, but the MFSA licence was never issued after the Swedish press report- ed that Falcon Funds had obtained clients' accounts fraudulently, lead- ing to an investigation by the Swedish Pensions Authority. Indeed, Temple further alleged that Falcon's directors were already aware that Ingmanson could have used money invested in one of his instru- ments (Solid Venture ETI) to advance a high-interest loan to Swedish pay- day loan company Trustbuddy, right before its bankruptcy. "The Falcon Funds board even had a conference call concerning the said articles during Christmas time in 2015," it said. "Anthony Fenech, Joseph Xuereb and Ian Zammit were constantly in communication with Ingmanson through emails sent to [his] address… all these emails are related to the period preceding the articles which appeared in the Swedish media and therefore clearly show that the di- rectors were well aware of defendant Emil Ingmanson's connections with those investments," Temple said. EXPLAINER Falcon Funds Falcon Funds ran three sub-funds (aggressive, cautious, balanced) on the Swedish pension system, allowing pension savers to invest in these funds. As a SICAV, the fund is ultimately owned by the savers themselves, but the fund is run by its directors. However, all investment decisions are delegated to another firm – in this case Temple Asset Management – to manage the cash by investing it in high-performing or risky investments that can improve the value of the savings. An investigation by the Swedish Pensions Authority, prompted by several complaints, revealed that clients from another pension fund, which underwent a merger with another fund, had been misleadingly transferred to Falcon Funds. Additionally, a consumer call centre employed misleading tactics to entice savers to transfer their accounts to Falcon Funds. Finally, the SPA said that investments made in "illiquid" instruments meant it would not recoup the value of the savings, so it demanded the return of some €267 million in some 22,000 pensioners' savings, and kicked off Falcon Funds from the pension platform and filed a report with the Economic Crimes Authority in Stockholm. The SPA has said that Falcon Funds' lawsuit against Temple and Ingmanson (it wants a prohibitory injunction on his Sliema property) confirms its original accusations in its own investigation. Falcon Funds is now under the control of auditors KPMG, on order of the MFSA, to ensure the orderly disbursement of the pension funds. Falcon versus Temple Anthony Farrell, the owner of Temple Asset Management, and below, the nameplates at the Floriana address where Temple ran its offices. The missing nameplate is that of Falcon Asset Management, which was removed after the MFSA investigation kicked off