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Banished Islanders

Speak to Riester on Emerald Dragon Island to reach the Exiled Lands. Find the thief who stole the Emerald Dragon Soul among the Crazed Dragon Islanders, then take the evidence to Berger.
 

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Introduction

The Emerald Dragon lives in seclusion after his defeat by Scarlet Phoenix at the Killing Ground. His grief has no release, and spills out into the outside world. The Dragon Islanders, who used to be the Emerald Dragon's guardians, were banished after one of them stole the Emerald Dragon Soul. They feel this punishment is unfair, and Riester has promised to show you the way to the Emerald Dragon if you can find the thief among them.

NPC Dialog

(Riester begins gesturing once again, this time explaining the circumstances of his people. It seems that they used to be the Emerald Dragon's loyal servants, but after one of them betrayed the Emerald Dragon and stole the Emerald Dragon Soul, his entire entire clan was punished. It appears he wants you to go to the Exiled Lands and find the thief.)

Quest Completion

You certainly have a direct way of dealing with problems. This is indeed the Soul Shard, but at this point I doubt it even matters anymore.