LendingClub faces DOJ SEC investigations could buy more of its loans
LendingClub
The peer-to-peer lender LendingClub  is on the cusp of being investigated by the US Department of Justice and the Securities and Exchange Commission  and it is in emergency talks to coax more buyers onto its platform to shore up the business.
 LendingClub  made the disclosures in a regulatory filing on Monday.  It  follows the shock ousting of  LendingClub  founder and CEO Renaud Laplanche last week after an internal review. The stock crashed 26% on the day and is down over 50% since then.
The board cited issues with "data integrity and contract approval monitoring and review processes" for Laplanche's exit  as well as issues surrounding an apparent financial conflict of interest in an investment Laplanche made in a company doing business with  LendingClub .
The forced exit of Laplanche has sent  LendingClub  into a full-blown crisis that threatens the very core of  its  business.
UPDATE: Since  publication LendingClub  has provided BI with the following statement:
 LendingClub  was founded in 2007 and is a peer-to-peer lender; consumers can take out loans of up to $40 000 (Â£27 654)  supplied by a third party  that are then packaged up and sold to institutional investors who want to receive the stream of interest payments in return. It matches lenders with investors  a little like UK companies such as Zopa.
 LendingClub  says:
But Laplanche also failed to disclose his personal interest in  a fund that LendingClub was considering investing in   and The Journal claims he had invested millions in  that fund  so it could buy LendingClub's loans  effectively to boost demand.
The vehicle  which Bloomberg said was Cirrix Capital  bought $114.5 million worth of  LendingClub  loans in the first quarter of the year  according to Monday's filing.  LendingClub  director John Mack and Laplanche are all investors in Cirrix  according to Bloomberg. Cirrix is now helping Lending Club with emergency funding.
 LendingClub  claims to take no credit risk itself  but  it  clearly has some exposure to the risk if  it  is investing in a fund that is buying  its  loans. Discussing  LendingClub 's investment in the vehicle that bought the loans   LendingClub  says  it  "determined none of these events were required to be recognized or disclosed."
As a result of the whole fiasco   LendingClub  has received a grand jury subpoena from the US Department of Justice and has been contacted by the SEC   it  said in a filing on Monday.  The company  says "no assurance can be given as to the timing or outcome of these matters. "
LendingClub  also warns that  it  may face legal proceedings over the whole thing  but  it  says  it  doesn't think any liabilities from an eventual judgment will have a "material effect on  its  financial condition."
 LendingClub  is already facing two class-action lawsuits in the US  both filed since the start of the year.
One  filed in California  accuses  the company  of "making materially false and misleading statements in the registration statement and prospectus issued in connection with the IPO regarding  among other things  the company's business model  compliance with regulatory matters  and their impact on  the company 's business  operations  and future results."
Another  lodged in New York  claims people "received loans  through  the company 's platform  that exceeded states' usury limits in violation of state usury and consumer protection laws."
' The company  may need to use  its  own funds to purchase  these loans'
[TGT] is on the cusp of being investigated by the US Department of Justice and the Securities and Exchange Commission  and it is in emergency talks to coax more buyers onto its platform to shore up the business.
  [TGT]   made the disclosures in a regulatory filing on Monday.   [TGT]   follows the shock ousting of  LendingClub  founder and CEO Renaud Laplanche last week after an internal review. The stock crashed 26% on the day and is down over 50% since then.
The board cited issues with "data integrity and contract approval monitoring and review processes" for Laplanche's exit  as well as issues surrounding an apparent financial conflict of interest in an investment Laplanche made in a company doing business with  LendingClub .
The forced exit of Laplanche has sent   [TGT] into a full-blown crisis that threatens the very core of   [TGT]   business.
UPDATE: Since   [TGT] has provided BI with the following statement:
  [TGT] was founded in 2007 and is a peer-to-peer lender; consumers can take out loans of up to $40 000 (Â£27 654)  supplied by a third party  that are then packaged up and sold to institutional investors who want to receive the stream of interest payments in return. It matches lenders with investors  a little like UK companies such as Zopa.
  [TGT]   says:
But Laplanche also failed to disclose his personal interest in  a fund that  [TGT]  was considering investing in   and The Journal claims he had invested millions in  that fund  so  [TGT]  could buy LendingClub's loans  effectively to boost demand.
The vehicle  which Bloomberg said was Cirrix Capital  bought $114.5 million worth of   [TGT]   loans in the first quarter of the year  according to Monday's filing.   [TGT]   director John Mack and Laplanche are all investors in Cirrix  according to Bloomberg. Cirrix is now helping Lending Club with emergency funding.
  [TGT]   claims to take no credit risk itself  but   [TGT]   clearly has some exposure to the risk if   [TGT]   is investing in a fund that is buying  its  loans. Discussing  LendingClub 's investment in the vehicle that bought the loans   LendingClub  says  it  "determined none of these events were required to be recognized or disclosed."
As a result of the whole fiasco   LendingClub  has received a grand jury subpoena from the US Department of Justice and has been contacted by the SEC   it  said in a filing on Monday.  The company  says "no assurance can be given as to the timing or outcome of these matters. "
 [TGT]   also warns that  it  may face legal proceedings over the whole thing  but   [TGT]   says   [TGT]   doesn't think any liabilities from an eventual judgment will have a "material effect on   [TGT]   financial condition."
 LendingClub  is already facing two class-action lawsuits in the US  both filed since the start of the year.
One  filed in California  accuses  the company  of "making materially false and misleading statements in the registration statement and prospectus issued in connection with the IPO regarding  among other things  the company's business model  compliance with regulatory matters  and their impact on  the company 's business  operations  and future results."
Another  lodged in New York  claims people "received loans  through  the company 's platform  that exceeded states' usury limits in violation of state usury and consumer protection laws."
' The company  may need to use  its  own funds to purchase  these loans'