LendingClub Corporation (NYSE: LC) has had
quite a tumultuous summer. Since May, the company and the media have revealed to investors:
- Its CEO and founder was complicit in the compromising of internal controls
- Its internal controls were ineffective as of December 31, 2015
- It received a subpoena from the Department of Justice
- Goldman Sachs lowered its loan origination growth estimates by 9 percent
- A report on loan sales had to be corrected when the initial report didn’t fully
disclose the amount of loans purchased by the company itself
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Picking Up Investors Fleeing LendingClub
On Tuesday, the Wall
Street Journal examined two new revelations: that the former CEO and his family bought loans in the early days of the company
to artificially boost volumes, and that more recently, internal funds were being improperly valued.
Investors’ reaction to the internal fund misvaluation was dramatic; the company has now restricted redemptions from the fund
after the amount of redemption requests became equal to 58 percent of the fund’s assets.
Shares of LendingClub were higher Tuesday, though, on news of a new CEO, cost cutting
measures and reports that the CEO was still expecting the company would see $40 million in loans on its balance sheet by the end of
June.
There were also reports late Tuesday that Stone Ridge is buying $1 billion worth of LendingClub loans.
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