AltFi.com uses cookies on this website. They help us to know a little bit about how you use our website, which improves the browsing experience and marketing - both for you and for others. They are stored locally on your device. By continuing to use this site you accept this use of cookies. Go to the Privacy and Cookies page for more information. You'll see this message only once.
Not signed in. Log in here.

Your daily download of all things alternative finance and fintech, from us at AltFi


 

Share Selling Spree Preceded Trustbuddy Demise




By Ryan Weeks on 27th October 2015


An update in the Swedish press suggests that former members of the Trustbuddy management team cashed in prior to company’s decline.

 

The report – which surfaced last week in the Swedish publication “Di” – suggests that former CEO Jens Glasø and Director Rune Glasø pocketed at least SEK 130m on share sales from 2012 onwards. Jens Glasø has been portrayed as the “biggest winner” in the Trustbuddy saga. The former CEO sold nearly 55 million shares at a value of SEK 92m since the close of 2012. These shares were seemingly sold through his company Jac Invest AS.

 

The larger part of Glasø’s holding was shipped in Q4 2013, when he sold 30m shares for an approximate price of SEK 69m, by Di’s estimations. The timing of this sale coincided with the company’s highest closing price of 2.44 kronor on 11th December 2013. Trustbuddy was then valued at close to one billion SEK, as opposed to 88m SEK when shares ceased trading on 7th October. Di reports that Glasø’s stake in the company decreased gradually from 27% in late 2012 to just 4% at the end of June 2015. Below is a 5 year view of Trustbuddy's share price from Bloomberg:

 

 

The suggestion in the local press is that Trustbuddy’s management knew that the company was doomed, that it was heading for insolvency, and that their selling of shares was therefore illegal.

 

Swedish police are now looking into the Trustbuddy case for evidence of embezzlement and insider trading, and the Economic Crimes Bureau (EBM) has reportedly launched a preliminary investigation.

 

Trustbuddy has since filed for bankruptcy, and administrators are now exploring options for recompensing the platform’s 3,500 individual lenders. Roughly SEK 44m is said to be outstanding at present. 

 

The Trustbuddy debacle has shaken the peer-to-peer lending space. The news has already provoked impassioned responses from a selection of industry leaders, calling for a unified effort to preserve the good reputation of the sector. Di’s findings may have made that challenge a little steeper. Read the article in full here

Comments

RGOG

19 Nov 2015 11:09am

Here here I fully agree! The legal rights in the property are unchanged by the criminal actions of the management. Trustbuddy was merely an arranger for fee. The contracts between the parties are still valid and enforceable and should be so enforced for the benefit of the lenders.

Benedikt

11 Nov 2015 10:17pm

The Trustbuddy Liquidators Letter to Lenders and my response. To TrustBuddy AB's (publ.) lenders Stockholm, 11 November 2015 LOANS MANAGED BY TRUSTBUDDY AB (PUBL.) IN BANKRUPTCY TrustBuddy AB was declared bankrupt 19 October 2015 and the District Court appointed me as official receiver in the bankruptcy. As has been reported in media there are a number of complex legal issues to consider in the bankruptcy. The se├żup of "peer-to-peer lending" is based on the assumption that TrustBuddy has only acted as an arranger of the loans between lenders and borrowers. Due to how TrustBuddy has managed the loans and funds there are some uncertainties whether certain loans between lenders and borrowers are traceable and also what the legal consequences of the language used in the terms and conditions of the loans are in relation to the lenders' rights in bankruptcy. Another question is whether the lenders with funds deposited in TrustBuddy are entitled to segregate its funds standing on the company's client accounts as per the date of the bankruptcy, and if these lenders have a collective proportional right in relation to each lender's individual claims against TrustBuddy with regard to received loan payments from borrowers. The same question arises in relation to outstanding debts, which are being paid during the bankruptcy proceedings. There are a number of immediate issues which must be addressed regardless of the answers to the questions above. As the bankruptcy trustee, I am responsible to ensure that the property does not lose its value during my bankruptcy administration. ln view of the proportion of bad debt (the company has assessed that at least 5/6 of the outstanding loan amounts are considered to be "bad debts") and also that these loans rapidly deteriorate in value drastically I have decided to take the following measures to maintain the value of the outstanding loans: 1. The bankruptcy estate does not intend to enter into any existing agreement with lenders. Please consider the following points as the conditions of services delivered by us, as the bankruptcy estate. 2. The bankruptcy estate will, when necessary, resume collection actions on behalf of the lenders by signing short-term contracts with existing debt collection agencies. The cost of these measures will be charged in the same way as they have been prior to the bankruptcy. 3. My assessment is that the loan portfolio will lose value unless a new party promptly takes over the administration of it. As each loan is fragmented between a large number of lenders in small portions and individual recovery of these parts may give rise to legal difficulties, including but not limited to how paid instalments in a fragmented loan should be allocated. Also, the cost of recovering the loans in such way would be substantial. The bankruptcy estate therefore intends, with the lender's best interest in mind, to sell the loan portfolios to the highest bidder and we believe that the bankruptcy estate is entitled to do this also if considered to be made on behalf of lenders. The distribution of the revenue from such sales will, in the event the loans are shown to constitute segregated property and this in practice is possible, be distributed to the lenders on the basis of two purchase prizes, one for fresh loans and another for bad loans. The above constitutes emergency measures taken to prevent that the value of outstanding loans deteriorate further. With respect to the rising and urgent situation, we ask you, if you have any objections, to contact us no later than next Tuesday, November 17,2015 at trustbuddy@lindahl.se. Kind regards MY RESPONSE >>>>With respect to the rising and urgent situation, we ask you, if you have any objections, to contact us no later than next Tuesday, November 17,2015 at trustbuddy@lindahl.se.<<<<<< I register several objections. I own a reasonable sum of money invested in loans that were arranged by Trustybuddy on my behalf and for a consideration under a contract agreement entered into on my side with absolutely no criminal intentions. The principle and any interest due to date on these loans is still my property, less any commissions due to Trustbuddy under the terms of that contract agreement. I own new good quality Trustbuddy loans in Norway, Sweden, Denmark, Poland and Finland and there is a transactional history on my accounts of repayments and re-lending. Only Spain was suspect but my exposure there was small. TrustBuddy acted as an arranger of the loans between lenders and borrowers. The core principle of P2P lending. I have never made any agreement to the contrary. Therefore I am actually the owner of all these individual loan agreements / contracts. Criminal actions comprising theft by former and potentially current Trustbuddy management does not change this fact. Nor do these criminal actions by past and present Trustbuddy management entitle the liquidators to unilaterally change the ownership of these loan agreements and the principles and interest sums due from the borrowers. >>>>Please consider the following points as the [conditions of services] delivered by us, as the bankruptcy estate<<<< >>>>>2. The bankruptcy estate will, when necessary, resume collection actions on behalf of the lenders by signing short-term contracts with existing debt collection agencies. The cost of these measures will be charged in the same way as they have been prior to the bankruptcy.<<<< I have no objection to this. >>>>>The bankruptcy estate therefore intends, with the lender's best interest in mind, to [sell the loan portfolios to the highest bidder] and we believe that the bankruptcy estate is entitled to do this also if considered to be made on behalf of lenders. The distribution of the revenue from such sales will, in the event the loans are shown to constitute segregated property and this in practice is possible, be distributed to the lenders on the basis of two purchase prizes, [one for fresh loans] and another for bad loans.<<<<<< >>in the event the loans are shown to constitute segregated property<<<< The loans are segregated property. The loans are written between lender and borrower with an interest rate of 12% per month, 144% per year. Compounded monthly that is 400 % per year. There is a legally enforceable contract in place for every loan and the outstanding value doubles every six months that payment is delayed by a borrower! Maybe it would have been bad publicity for Trustbuddy previously to pursue repayment of these escalating loans but I have no such concerns. I do not agree that you can just [sell the loan portfolios to the highest bidder]. Prior to your entering into any agreement with a [bidder] debt collection agency it must be agreed that: The loans remain the segregated property of (me) the lender. That only the right to collect the loan and interest and principle at a reasonable commission rate is contained in the agreement with the debt collector. That the principle and compound interest on any unpaid proportion of the loan continues to be the property of, and to accumulate to, the benefit of the original lender (me) and cannot be released by any other party except on payment in full of the outstanding amounts due. Under no circumstances shall the title to the principle pass to the debt collection agency for some paltry sum. Worst still that that this money should be stolen and used to repay the personal debts of Trustbuddy management.


Enter your name:

Enter a comment in the box below: