Dolphin Trust collapse - Wealth Options broker

Sophia808 said:
Why isn't this getting the attention the huge losses and exposures deserve
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Because the people affected have not organised themselves into a cohesive group to raise the matter.

But there is also the small issue that they bought an investment promising them a huge return, ignoring the basic principle of "if it looks too good to be true, it probably is."

Brendan
 
Brendan Burgess said:
Because the people affected have not organised themselves into a cohesive group to raise the matter.

But there is also the small issue that they bought an investment promising them a huge return, ignoring the basic principle of "if it looks too good to be true, it probably is."

Brendan
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To be fair Brendan, many people would have been sold these rather than bought them on their own.

The FSA in the U.K. published clear analysis as to the sources of poor outcomes for consumers

1 pillar related to poor due diligence on the part of intermediaries. A sales brochure promising the moon on a stick isn’t due diligence

2. The conflict of interest presented by commissions

This matter has the hallmarks of both of those
 
Here is what the Information Memorandum said - I have highlighted some of it in bold

10. Risk Factors

Dolphin Trust will take great care to only share the opportunity with those who accept that they have the ability to absorb the risks associated with the Loan. This opportunity has been structured in a manner so as to make it attractive to holders of Self Administered Pension Schemes (SSASs), Approved Retirement Funds (ARFs), Approved Minimum Retirement Funds (ARMF), Self Invested Personal pensions (SIPPs), Personal Retirement Savings Accounts (PRSAs) and Personal Retirement Bonds (PRBs). However, Lenders should be aware that they will be required to bear financial risks of the Loan. Lenders should understand the risks and satisfy themselves that this type of opportunity is suitable for their personal circumstances and financial resource.

Potential Risks
A. Removal of the Tax Break incentive by the GermanGovernment.

B. A major fall in German property prices, making sales to German investors difficult.

C. The collapse of the Euro currency, which could create a recession in Germany or at least stimulate greater caution and impact on current bank lending practices. This might create a knock on effect, in relation to the loans that are currently being made available to German Property Buyers by the GermanBanks.

D. Past performance is not necessarily a reliable indication of future performance.

E. This Dolphin Trust Opportunity is not suitable for clients who require hard capital protection, neither is it suitable for those clients who require ready access to their capital during the term of the Loan.

F. This Dolphin Trust Opportunity should be considered high risk and despite all the efforts that have been taken to mitigate the risks you could lose some or all of your initial loan. Please consult your financial advisor to make sure that this facility fits within your risk profile.

G. It is important to note that the security to be provided in holders of Loan Notes, when liquidated may not equal the value of the LoanNote.

Dolphin Trust do minimise the risks, regarding the development and renovation of a property, through the completion of an in depth Due Diligence and analysis process. In the unlikely event that one or all of the above occurs, any person choosing to lend to Dolphin Trust GmbH may expose themselves to losing all of the funds loaned, this list is not all encompassing.
 
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But the risks were not listed in the Information Sheet

Just the opportunities.
 

Attachments

  • Dolphin Trust Information Sheet.pdf
    1.7 MB · Views: 26
The FAQ from Wealth Options put the risks at the end after selling the great security and history of their involvement with Dolphin Trust.

WARNINGS
• Terms and conditions apply. See product brochures for full details.
• There is no guarantee that these investments will provide a better return than a deposit or any return at all.
• The value of the investment can fall as well as rise.
• This FAQ does not constitute advice.
• Please note that the provision of some of these products and services do not require licensing, authorisation or registration with the Central Bank and, as a result, they are not covered by the Central Bank’s requirements designed to protect consumers or by a statutory compensation scheme.
 
Marc said:
To be fair Brendan, many people would have been sold these rather than bought them on their own.
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I agree.

But if an advisor tells you that he can get you 10% return on your money when deposits are paying 1% , you have to share some of the responsibility.

And, I have pointed out that any advisors who sold this project have questions to answer.

Brendan
 
Sophia808 said:
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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The Central Bank haven't got a grip on what is going on in markets today and are not up to date. I was on a webinar by a well respected actuary who spoke about how regulated and non regulated products are being mixed all the time. He had presented this to the Central Bank and he said there were glazed eyes. They simply didn't understand. The Central Bank needs more power to be able to do its job properly.


Steven
www.bluewaterfp.ie
 
Brendan Burgess said:
Because the people affected have not organised themselves into a cohesive group to raise the matter.

But there is also the small issue that they bought an investment promising them a huge return, ignoring the basic principle of "if it looks too good to be true, it probably is."

Brendan
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I suspect that most of us "bought an investment promising us a huge return" on the recommendations of our QFAs. At the time that I invested in Dolphin, I wasn't aware of what the "FA" meant in that particular acronym!
 
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This morning on Leaders Questions, it opened with Sinn Fein Pearse Doherty skewering the Central Bank on the simple point of why they had not issued a public warning since 2016? Leo Varadkar looked baffled and confused. There is nothing in law to stop the Central Bank issuing public warnings and its concerns. It did so recently about Bitcoin but when it really mattered, when the Bonanza years trebled loan notes 2017-2019 and reached through many of the firms it regulates, it failed utterly in its mandate, to Protect Consumers.

Am I missing something here because this is really black and white stuff. It is ironic that it took a SF Finance spokesperson to cut through the guff to the hard truth, regulatory failure on a grand scale. It is up on YouTube
 
Sophia808 said:
There is nothing in law to stop the Central Bank issuing public warnings and its concerns.
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What should they have done?

"We do not regulate property investments or loans to property companies, so be careful"

"Don't invest with a German investment company called Dolphin Trust"

I presume that they will look at the regulated entities who sold these to their clients.

But it seems to me that the people who lost money are not even bothering to challenge their financial advisors.

They are blaming the Central Bank for their losses.

Brendan
 
Hi Shirazman

You might be right.

But, you guys need all the publicity you can get on this. It would help if one of you had got a Fine Gael TD to raise it. But failing that, any TD will do. And Pearse is the best for articulating this sort of issue.

Brendan
 
Brendan Burgess said:
Hi Shirazman

You might be right.

But, you guys need all the publicity you can get on this. It would help if one of you had got a Fine Gael TD to raise it. But failing that, any TD will do. And Pearse is the best for articulating this sort of issue.

Brendan
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I'm not really sure what publicity can achieve for us, Brendan. And anyway, I'd prefer to deal with politicians who choose to work quietly behind the scenes rather with than those who use megaphones and who will move on to the next grandstanding opportunity as soon as one arises.
 
Interesting programme.

Pointed the finger at the brokers very clearly who got 7% or 8% commission.

Oddly enough, no mention at all of Wealth Options.

I think that Coleman Legal will probably go after the brokers. I can't think who else they would go after.

They spoke to two investors. I am surprised that they did not put the question to them "What were you thinking? That you could get a 13% return with very little risk?"

Quite a few people had pension funds. Again, totally unsuitable for pension funds so the advisors have questions to answer here.

Those impacted should get together and they should all complain to the Ombudsman.

Even though it's an unregulated product, I presume that they can complain about the financial advisors who sold them.

Brendan
 
Brendan it is unclear if the Ombudsman can or will rule here, then there is the issue of no Broker cover. In the UK the FSCS (compo scheme,) covers IFA damages like this and has paid out £24m so far but the regulator the FCA regulates the IFA fully including loan notes.

In Ireland the Central Bank did a runner?

Let's face it with property values at 10% of the loan notes there will be zero coming back after costs and the German liquidation probably lasts into the 2030's.

That leaves Irish High Court multi party action through specialists like Coleman. That is the guy who previously successfully rolled over Rabo Bank (ACC) and ITC for misselling loans for deposit account type 'World Series' bonds. That settled after 1 day after allegations of fraud was admitted in the Supreme Court, thus defeating the statute of limitations defence. Rabo ordered the case settled to safeguard its AAA rating, it appears.

Victims here have a chance because any action will sweep in German actors, the Wealth Option lawyers, the State notaries in addition to Brokers, Wealth Options and their insurers where relevant. It is reasonable also to expect the court to set aside the corporate veil if warranted leaving certain directors personally liable, so there is a lot to play for and victims need to know that before walking away.

What is extraordinary is the degree to which Brokers have victims in Stockholm syndrome, the most common thread is 'no one told me this was unravelling'. As for the risk fine print, there are no declarations in applications that required investor signature on risk acknowledgments, so easily breezed past at point of sale.

Where advice was by Central Bank regulated firms, cash pulled from existing regulated products, transferred through Mifid II regulated entities PRSAs, PRBs, ARFs, some of it going to regulated instruments like deposits, then a large chunk gets ejected into unregulated loan notes, how had the victim any chance? They were told it was secured on German property valuations that appear phantom.

Most victims have filled Risk Questionnaires as Low Risk conservative investors so how come their capital ended up in high risk loan notes where 100% loss was perfectly possible? That is the issue for brokers, that and zero due diligence even basic maths on a post it would show this to be a ponzi. Then there is no Audited accounts since 2015 for Dolphin to get past. This looks more like a criminal enterprise than an accidental ponzi. The statement from the German liquidator that cashflows through accounts were in excess of €3bn that is 3 x Loan Notes raised is a tell?

In very many pension cases victims were told to cash out Defined Benefit pensions like the NHS pensions agency, absent any breakeven analysis or actuarial examination, so that's a clear issue and its insured by PI cover. The common policy is AIG.

Any victims reading this here really ought to put their file in chronological order, copy all paperwork and go see Colemans, this is likely to evolve into the mother of all financial litigation.
 
Sophia808 said:
That is the guy who previously successfully rolled over Rabo Bank (ACC) and ITC for misselling loans for deposit account type 'World Series' bonds.
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Really? How well did the investors in ACC do? Did they get back more than the costs of taking the action?

It may be unclear whether the Ombudsman has jurisdiction here. So lodge a complaint and you will know soon enough.

The Ombudsman should always be the first port of call before the legal profession.

Brendan
 
Afaik know those that qualified got back their interest, the costs were spread thinly across a large number but the settlement is secret.

You miss the point on the FSO, even if it rules, it is only vs the broker and none of them is insured, so they'll just fold tent. Any CRO examination will show few if any net assets, most are lifestyle SMEs. The route to recovery is to get insured and large actors involved.
 
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