Dolphin Trust fallout continues to spread; Korean bank CEO steps down

The CEO of the brokerage arm of Shinhan Financial Group, one of South Korea’s largest banks, has stepped down in an ongoing scandal partly involving the funnelling of investors’ money into Dolphin Trust (aka German Property Group).

Shinhan funnelled $306 million into Dolphin Trust via derivatives, according to The Korea Herald.

But the return on investment now looks bleak due to the repeated extension of maturity caused by the German authorities’ apparent reluctance to approve the project and other complications within between related parties.

Dolphin Trust first started defaulting on payments to investors in the latter half of 2018. In February it told investors that a buyout offer had been received but I’m not aware of any more recent news about this.

On 12 March Dolphin’s LSE-listed offshoot, Vordere plc, applied to de-list from the stock exchange. In a letter to shareholders it announced:

As Shareholders will be aware, trading in the Company shares has been suspended since 5th July 2019.  At that time, the Company had been seeking the necessary approval of the Financial Conduct Authority (“FCA”) to a Prospectus to enable the listing of the German Shares.  When your New Board was appointed it became apparent that your Company was a long way off agreeing the terms of an FCA approved Prospectus and, having investigated the matter in considerable detail, your New Board are now of the view that the prospects of securing an FCA approved Prospectus are highly unlikely and, therefore, consideration needed to be given to alternative strategies.

After much consideration and discussion with the Company’s advisers, your New Board have concluded that it is in the best interest of all Shareholders that the Company be de-listed.

Vordere shareholders will therefore no longer be able to sell their shares via the LSE, although Vordere says it will put in place an alternate trading platform in place, and investigate the possibility of the company making a buy-back offer.

Vordere is currently mulling legal action against three former directors, Nicholas Hofgren, Stuart Cheek and Graeme Johnson, the former two of which were directors of a Guernsey-based Dolphin company.

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