Background on Michael Grech Financial Investment Services
Michael Grech Financial Investment Services Limited (www.michaelgrechfinancial.com), a firm regulated by the Malta Financial Services Authority (MFSA), operates out of Gozo, Malta. The company is led and majority-owned by Michael Grech.
In a recent decision, the Office of the Arbiter for Financial Services (OAFS) ordered the firm to pay €43,000 in compensation to former clients. The ruling found that the firm failed to follow applicable financial regulations in the sale of certain investment products, resulting in significant client losses.
Complaint and Financial Product in Question
The case dates back to 2018, when two investors filed a formal complaint with the Maltese Arbiter. They alleged that Michael Grech Financial sold them a product in 2012 that eventually collapsed. The investment was named:
-
Commerzbank 3-Year Phoenix Worst of Equity-Linked Notes
This structured product ultimately failed, resulting in the loss of a substantial portion of the clients’ capital. The Arbiter concluded that the investment had not been appropriately sold in accordance with local financial laws and standards.
Controversial Political Associations
Michael Grech has also drawn public attention recently after being spotted at a private lunch with Maltese Prime Minister Robert Abela, who has faced multiple allegations related to tax evasion. Grech was joined at this gathering by high-profile building contractors known for their ties to the current Government.
Soon after this meeting, the ruling Labour Party of Malta reportedly received a political donation exceeding €200,000 from undisclosed sources in Gozo.
MFSA and Regulatory Integrity Concerns
Despite the compensation ruling and media scrutiny, Michael Grech is still considered a “fit and proper” individual by the Malta Financial Services Authority (MFSA). The regulator, led by Edwina Licari (previously known as a travel companion of former CEO Joseph Cuschieri) and Christopher Buttigieg, has faced significant criticism in recent years. Buttigieg, notably, was one of the key figures behind the now-defunct “Blockchain Island” initiative.
Since Malta was grey-listed by the Financial Action Task Force (FATF) in June 2021, a notable number of licensed firms, funds, and SICAVs have voluntarily surrendered their operating licenses, raising further questions about the country’s regulatory credibility.
Industry Fallout and Reputational Impact
This case adds to a string of controversies involving Malta’s financial sector, as regulatory bodies and licensed firms come under increasing scrutiny. The situation highlights ongoing concerns regarding regulatory enforcement and the blurred lines between finance and politics in the country.
Reported by Scam-Or Project
Scam-Or Project is committed to uncovering misconduct in financial services and advocating for transparency across jurisdictions.