A defunct investment firm has been ordered to pay over €250,000 in compensation to clients who were sold unsuitable investments.

In a series of six decisions handed down earlier this year, the Office of the Arbiter for Financial Services found All Invest had failed to safeguard its clients’ interests and, in some instances, even advised them to invest in a floundering  Australian fund.

The latest claims decided against All Invest follow on from a series of other abusive practices that led to compensation orders by the arbiter in 2018 and 2019.

One of the six cases saw All Invest director Wallace Falzon sell a €25,000 investment to an elderly couple who had inherited money from their daughter, who died at a young age.

According to testimony given to the arbiter, the couple, who had no prior investment experience, wanted a low-risk investment but were instead advised to put their money in the Australian LM Managed Performance Fund.

That particular fund was marketed in Australia for “sophisticated” investors.

It had already encountered liquidity problems in 2009. The couple were encouraged to invest in it two years later, in the hope of leaving a cash sum for their surviving children.

The financial arbiter said All Invest had mis-sold the investment to the couple and failed to safeguard their interests.

A pattern of mis-selling risky investments to inexperienced clients also emerged from the other five cases decided by the arbiter.

All Invest was ordered to pay clients sums ranging from €11,000 to €92,000.

The largest sum of compensation went to a fisherman and his wife, who had their life savings wiped out following the investment advice given by All Invest.

In his findings, the financial arbiter said the service provider had abused his position of trust and failed the basic principle of always acting in the clients’ best interests.

Analysis of the investment documents showed the husband was barely capable of signing his own name, the arbiter said. 

All Invest’s licence was revoked by the MFSA in 2013 as claims of malpractice against the company mounted.

In 2015, a court blocked Falzon’s attempt to liquidate the company, as investors feared this would mean they would never recoup their money.

The company’s last available accounts, dating back to 2016, show All Invest had a mere €146,000 in assets.

Claimants are eligible to a maximum compensation of €20,000 under the MFSA’s investor compensation scheme.