The Lending Club saga (May 2016)

  • Jeffries Investment Bank, as part of Lending Club's first publicly rated securitisation) requested an amendment to the company's T&Cs.
  • An unnamed employee at Lending Club changed the dates on $3m of existing loans to show them as having been issued after the introduction of the new T&Cs.
  • The investigation into that matter revealed that the CEO, Laplanche, had failed to declare an interest in Cirrix Capital, a fund that Lending Club had invested in. Reports also suggest that he was not forthcoming with the Board regarding what he knew about the mis-sold Jefferies loans.
  • Both Laplanche and John Mack, a Lending Club board member, owned stakes in Cirrix, which was a holding company that bought Lending Club loans.
  • Lending Club invested in Cirrix in March 2016. Not all members of the risk committee were aware of Laplanche/Mack interest before approving the deal. From BloombergFunds with backing from Laplanche and Mack, 71, had acquired $139.6 million of whole loans and $34.9 million of interests in whole loans, LendingClub said in its annual proxy filing last month, without identifying the funds. The company paid $7.4 million in interest to the family of funds, while earning $636,000 in servicing fees and $357,000 in management fees from the funds, according to the proxy. The terms “were not more favorable than those obtained by other third-party investors,” according to the filing. As of April 1, the company, Laplanche and Mack owned about 31 percent of Cirrix.
  • The New York Department of Financial Services issued Lending Club with a subpoena and warned that other MPLs may come under scrutiny.