Dolphin Trust collapse - Wealth Options broker

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I'm one of the 1,800 Irish suckers who took the German Property Group (formerly called Dolphin Trust) bait. :confused:

Although initially hesitant about investing, I was convinced when my broker sent me the following assurance from Wealth Option Trustees (WOT):-

"We hold first charge security over property in Germany as security for investors which is valued in excess of or at least equal to the amount of funds raised by Irish investors ..... and if there is a default in investors coupons or capital we can call on this security and sell those properties."

It was recently reported in the Irish media that this so-called security may effectively be worthless, which leads me to wonder what (if any) options I have to recover all - or even some - of my investment. I am aware that, in the UK, questions have been asked in Parliament on behalf of some worried investors and the UK Financial Services Authority appear to be taking some sort of action, but there's no sign of any similar activity in Ireland.

Has anyone got any suggestions as to what I should do next, please?
 
From the Irish Times article

More than €500 million has been raised from loan note sales in the Republic in the past decade, according to some estimates, driven most recently by the high commissions brokers can make in this area as new EU rules have made it more difficult to make lucrative returns switching clients in and out of regulated products.
...
Acting on the advice of her financial broker, Dineen says she bought €127,000 of loan notes in February 2017 that were to be used by the then-named Dolphin Trust to develop and renovate listed buildings in Germany, the High Court in Dublin heard this month as the septuagenarian sought to have an Irish special purpose vehicle linked to the German group put into liquidation.

...
All told, 1,828 Irish investors bought €150 million of loan notes issued by Dolphin Trust between 2012 and 2019, an investment administered - and, from mid-2018, distributed - in the market by Wealth Options Trustees Ltd (WOTL), based in Naas, Co [broken link removed]. The Irish investments were channelled to the German group through two special purpose vehicles (SPVs), MUT 103 and Dolphin MUT 116, registered to the same address and each sharing the same directors as WOTL: Eanna McCloskey and Brian Flynn.
...
Originally, the German product was distributed in the Republic through a Cork-based company called Dolphin IG. It was sold directly to investors by scores of brokers.

,,,
While the going was good, there was money to be made. Brokers earned commissions of up to 20 per cent.

...

When it first emerged in July 2019 that Dolphin Trust had missed interest payments in the UK, WOTL issued a letter to brokers highlighting how Irish investors were protected, saying it only passed on money to Germany “when we have security in place for a value in excess of the funds loaned”. As of that May, the “face value” of security held was about 182 per cent of loans advanced. “The security is held (or has been ordered) as a first legal charge assigned to the Irish [MUTS].”

...

Within weeks, however, Dolphin Trust would tell WOLT that it was not in a position to meet coupon payments due to Irish investors in December. The Naas firm, as administrator of the MUTs, hired a number of advisers, including law firm Dentons, to try and protect the interests of the Irish investors.

...
Dentons options provided to the court earlier this month said the GPG insolvency administrator believes that all of the loan claims of the Irish MUTs – which owe Irish investors €107 million – against the German group’s companies are “subordinated and therefore the granted securities could be challenged”.

...
“I am proceeding on the basis that the directors of the company (MUT 103) have no culpability, either moral or legal, for the potential problems with the security provided to it. Nonetheless, there is a stark difference between the position on security described to the brokers by WOTL and the situation as set out by Dentons,” said O’Moore. “The security obtained by the company, central to the protection of investors, was taken on the watch of (among others) the current directors. For the purpose of enforcing this security, and seeing off any challenge to it, it would be preferable that the company now comes under the stewardship of a liquidator supervised by the court.”
...
 
It might be a good idea for these investors to contact Coleman Legal

The wind-up of GPG will take years. Litigation may also be in store. Dentons has proposed that overseas advisers to the MUTs should be investigated. Keith Rolls, a senior solicitor with Dublin-based Coleman Legal, said he has “received instructions from clients to pursue action against a number of parties involved in the creation and selling of these products”. He declined to say how many affected investors are on board.
 
On reflection, I think that those affected should get together and make complaints to the Ombudsman about the professional advice they received or maybe even the sales literature.

Brendan
 
Can the FSPO do anything if it was an unregulated product?

“..case also throws into focus the risk entailed in the market for loan notes, an unregulated investment product used in this case and which has proliferated in recent years on the Irish commercial property scene.”
 
Shirazman said:
I'm one of the 1,800 Irish suckers who took the German Property Group (formerly called Dolphin Trust) bait. :confused:

Although initially hesitant about investing, I was convinced when my broker sent me the following assurance from Wealth Option Trustees (WOT):-

"We hold first charge security over property in Germany as security for investors which is valued in excess of or at least equal to the amount of funds raised by Irish investors ..... and if there is a default in investors coupons or capital we can call on this security and sell those properties."

It was recently reported in the Irish media that this so-called security may effectively be worthless, which leads me to wonder what (if any) options I have to recover all - or even some - of my investment. I am aware that, in the UK, questions have been asked in Parliament on behalf of some worried investors and the UK Financial Services Authority appear to be taking some sort of action, but there's no sign of any similar activity in Ireland.

Has anyone got any suggestions as to what I should do next, please?
Click to expand...
So that statement from WOT was not true. But it is not the brokers fault that it was not true. So why were they allowed to make that statement and who would be responsible for it being untrue. I suppose the real question is why are consumers not more protected. Why do people fall for get rich schemes all the time.
 
Brendan Burgess said:
The advisors were regulated. So I presume the Ombudsman can hear a complaint against them.

Brendan
Click to expand...
What can they complain about. Investing is a risky business. I would be surprised that people investing in this weren't told that investments can go up as well as down. My bank analysed me and said I'm so risk adverse here's basically no product they could offer me, or with such a low return as to make it pointless. It's the law here that they must so analyse clients.
 
Bronte said:
I suppose the real question is why are consumers not more protected. Why do people fall for get rich schemes all the time.
Click to expand...

Hi Bronte

It was the financial advisors who fell for the get rich quick scheme.

They wanted to believe it as they were getting 20% commission.

20% Commission and the customer getting 13% return on their investment? Those brokers have serious questions to answer.

From time to time, people send me a brochure that they have received offering stock market returns but with no risk. I tell them that it is not true and they ask me what the catch is. I tell them that I am not going to bother reading the brochure. There is a catch.

But they invest anyway.

Brendan
 
Brendan Burgess said:
From time to time, people send me a brochure that they have received offering stock market returns but with no risk. I tell them that it is not true and they ask me what the catch is. I tell them that I am not going to bother reading the brochure. There is a catch.
Click to expand...
My parents taught me that the shiner and slicker the brocure the more it tells lies.

How can a brochure offer returns with no risk. Is that actually legal. I imagine there is some small print somewhere saying it's all subject to what you sign up for and what you sign up for is high reward for high risk.
 
A journalist has contacted me asking if anyone would be willing to talk about their experience of Dolphin Trust. Start a conversation with me if you are open to this.

Brendan
 
I would be interested in seeing the original brochure or marketing material for this if anyone has it.

Brendan
 
Brendan Burgess said:
On reflection, I think that those affected should get together and make complaints to the Ombudsman about the professional advice they received or maybe even the sales literature.

Brendan
Click to expand...
I have contemplated that course of action, but I believe that my advisers were almost as badly duped by the promoters as I was so am reluctant to throw them under a bus. That said, I seem to remember that they got a free junket to Germany (courtesy of the Irish promoters, presumably) - which is more that I did :(

What does annoy me is that as they were aware that I was a risk-averse investor I should never have been recommended to invest in that product.
 
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Indeed!

Got this from my broker yesterday:

"A new entity, the GPG (German Property Group) Redress Group has been formed by 40
Broker Firms, to support their clients who invested in the Dolphin Trust investment. The
group represents 1,180 clients, from all parts of Ireland, who invested more than €65.5
million through two special purpose vehicles (SPVs) for cash and pension investment. Some
25% of the member firm principals and staff are investors in GPG themselves."

GPG investors were offered an investment based on a clear understanding that monies
invested would only be transferred to Germany when full and adequate security, in the form
of German Listed Buildings, was in place. This process was outlined in ‘Investors
Memorandum’ provided to investors in advance of their commitment and also in numerous
product brochures, booklets and communications.

The GPG Redress Group has been set up to support investors by engaging on their behalf,
where authorised and appropriate, with all connected parties to the investment, including
the Liquidator, the Pensions Authority, and the Department of Finance, among others."
 
Tonight RTE Primetime are covering this story, what views on regulating the loan note sector because this Dolphin debacle looks to be the tip of an iceberg involving thousands of pension savers and investors?

  1. Large numbers of regulated advisors sold investment, much of it pensions to Dolphin GMBH that had no Audited Accounts since 2015
  2. None of the Brokers are covered by Professional Indemnity but sold hundreds of millions in loan notes
  3. Much of the money went through MifiD regulated firms via PRBs, ARFs, PRSAs the majority of it outside the scope of the Central Bank

Why isn't this getting the attention the huge losses and exposures deserve, it is far more serious than Davy's conflict of interest?
Welcome views because this needs more discussion, the market is out of control
 
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