The Malta Financial Services Authority (“MFSA” or “the Authority”) has been monitoring and assessing the court developments relating to Zenith Finance Limited (C 42720) (“Zenith Finance”) and its former Directors, Mr Matthew Pace and Ms Lorraine Falzon. Mr Pace and Ms Falzon are also the Ultimate Beneficial Owners of Zenith (Tied Insurance Intermediary) Limited (C 85700) (“Zenith TII”).
The Authority was notified that Mr Matthew Pace and Ms Lorraine Falzon resigned from all positions in Zenith Finance and Zenith TII.
The MFSA fully understands and appreciates the concerns of clients of Zenith Finance and Zenith TII. The protection of clients and their assets is one of the MFSA’s main regulatory objectives. The MFSA’s powers to take regulatory action are subject to due process, as enshrined in the Laws of Malta.
On 22 March 2021, the MFSA was served with the Seizing and Freezing Order in terms of Article 36 of Chapter 621 of the Laws of Malta (Proceeds of Crime Act), as well as a Court Order in terms of Article 5 of Chapter 373 of the Laws of Malta (Prevention of Money Laundering Act) in respect of Zenith Finance Limited.
Zenith (Tied Insurance Intermediary) Limited was not served neither with a Seizing and Freezing Order in terms of Article 36 of Chapter 621 of the Laws of Malta (Proceeds of Crime Act) nor with a Court Order in terms of Article 5 of Chapter 373 of the Laws of Malta (Prevention of Money Laundering Act). However, the Authority is concerned in view of the recent developments in respect to Mr Matthew Pace and Ms Lorraine Falzon as the Ultimate Beneficial Owners of Zenith TII.
Thereafter, in accordance with the prescribed process, the Authority gave notice to Zenith Finance and Zenith TII that, pursuant to its regulatory responsibility to protect customers, it intended to issue a set of Directives. Zenith Finance and Zenith TII were invited to make written representations, again in observance of the law, within the timeframe stipulated by law.
After considering such representations, as it is legally bound to do, the Authority made the determination which can be accessed here in full. The regulatory action that the Authority has taken is summarised below:
Zenith Finance Limited
On 26 March 2021 the MFSA directed Zenith Finance Limited with immediate effect to:
(i) Refrain from onboarding of new clients and refrain from providing existing clients with any new or additional services;
(ii) Cease all outgoing transactions from the Company’s client accounts, including intra-client account transactions; and
(iii) Ensure that the Company and its directors maintain proper safeguard of all records relating to Zenith’s operations, including its investment services activities. The Company should therefore not destroy, conceal or alter such records in any way.
The Authority shall be closely monitoring any developments which may ensue in relation to the criminal proceedings against Zenith Finance, Ms Lorraine Falzon and Mr Matthew Pace to take into account any change in circumstances which could justify the maintenance, variation or withdrawal of the above Directives.
Additionally, in terms of Article 15A(1)(b) and (c) of the Investment Services Act and for the purposes of safeguarding the interests of investors, following a due process, Mr Stephen Paris has been selected by the Authority to occupy the role of a Competent Person for Zenith Finance with effect from 26 March 2021 in order to take charge of all the assets of Zenith Finance, including any assets related to the investment services business of Zenith Finance for the purposes of safeguarding the interests of the investors and consumers of Zenith Finance; as well as to assume control of the business of Zenith Finance to carry on that business until such time as the Authority may direct and to carry out such other function or functions in respect of such business as the Authority may direct.
The appointment of the Competent Person shall remain in force for a period of one (1) year subject to the possibility of renewal as the Authority may direct.
Zenith (Tied Insurance Intermediary) Limited
On 26 March 2021 the MFSA directed Zenith (Tied Insurance Intermediary) Limited with immediate effect to:
(i) Refrain from onboarding of new clients and refrain from providing existing clients with any new or additional services;
(ii) Cease all outgoing transactions from the Company’s accounts holding clients’ monies; and
(iii) Ensure that the Company and its directors maintain proper safeguard of all records relating to Zenith’s operations. The Company should therefore not destroy, conceal or alter such records in any way.
The Authority shall be closely monitoring any developments which may ensue in relation to the criminal proceedings against Ms Lorraine Falzon and Mr Matthew Pace to take into account any change in circumstances which could justify the maintenance, variation or withdrawal of the above Directives.
Furthermore, in terms of Article 16(2)(c) of the Malta Financial Services Authority Act and for the purposes of safeguarding the interests of policyholders, following a due process, Mr Stephen Paris has been selected by the Authority to occupy the role of a Qualified Person for Zenith TII with effect from 26 March 2021 in order to [i] liaise with Mapfre MSV Life plc and Mapfre Middlesea plc (“the Principals”) in respect of the relationship between Zenith TII and the Principals and any actions which the Principals deem fit to take vis-à-vis Zenith TII; [ii] act as the representative of Zenith TII vis-à-vis the existing clients of the Principals and to ensure that any queries of the clients addressed to Zenith TII are duly answered; [iii] safeguard the funds of the clients which are held in the clients’ account; [iv] ensure that the records of Zenith TII are duly safeguarded so that nothing is destroyed, concealed or altered; and [v] act on behalf of Zenith TII in the case that a board of directors is not properly constituted while providing prior approval to the decisions of the board of directors in the case it is properly constituted.
The appointment of the Qualified Person shall remain in force for a period of one (1) year subject to the possibility of renewal as the Authority may direct.
Mr Paris can be contacted on [email protected].
The MFSA remains committed to communicate further updates on Zenith Finance Limited and Zenith (Tied Insurance Intermediary) Limited.
Bio of Mr Stephen Paris
Mr Stephen Paris is an accountant and auditor by profession having completed his ACCA final exams in 1989. Mr Paris spent 30 years in the profession with Deloitte Malta and was admitted as a partner in 2000. As a partner, he served in various leadership roles at Deloitte as Head of Audit, Financial Services Industry Leader and Head of Risk and Regulatory Advisory. Mr Paris left Deloitte in 2019.
Throughout his career, he has led numerous audit and non-audit assignments for a variety of clients including private, public, listed, state owned, foreign owned, family businesses and regulated entities.
As Malta evolved to an attractive financial services centre, Stephen focused his efforts on this sector and transformed his client portfolio exclusively to entities regulated by the Malta Financial Services Authority, leading several audit and advisory engagements to clients involved in this sector.
Mr Paris was a council member of the Malta Institute of Accountants and lecturer in auditing for several years.
