Author Topic: LC - State and Financial Suitability  (Read 6743 times)

supermario987

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LC - State and Financial Suitability
« on: March 20, 2013, 10:15:17 AM »
I think this is dumb.  Is there any legal way to get around this? :o


writing2reality

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Re: LC - State and Financial Suitability
« Reply #1 on: March 20, 2013, 11:54:49 AM »
On the record: No, rules are rules

Off the record: Yes, you can get around these requirements

1) State requirement: Simply have an address in a state that allows investing in Lending Club. Say your parents live in a state that allows investment, you can set your address as their address and voila, you are good to go.
2) Financial Suitability: Lending Club doesn't run any checks on their investors and simply takes them at their word that they meet financial requirements to invest with Lending Club. No real work around needed.
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jsmathur

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Re: LC - State and Financial Suitability
« Reply #2 on: March 20, 2013, 05:11:28 PM »
Is anyone aware of the consequences of falsifying the mailing address in the way writing2reality is describing ?

For example, let's say I live in Arizona and have been investing in new issue LC notes (in violation of Arizona law, which says I can only invest in folioFN notes as an Arizona resident) but I list my mailing address as being Illinois (which allows full new issue and folioFN investing).

If Lending Club discovers my actual residence is in Arizona, what is Lending Club required to do?  Simply tell me I can't invest in new issue notes moving forward, but what about the portfolio of notes already accumulated?  Would these need to be sold?

Zach

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Re: LC - State and Financial Suitability
« Reply #3 on: March 20, 2013, 06:49:32 PM »
Is anyone aware of the consequences of falsifying the mailing address in the way writing2reality is describing ?

For example, let's say I live in Arizona and have been investing in new issue LC notes (in violation of Arizona law, which says I can only invest in folioFN notes as an Arizona resident) but I list my mailing address as being Illinois (which allows full new issue and folioFN investing).

If Lending Club discovers my actual residence is in Arizona, what is Lending Club required to do?  Simply tell me I can't invest in new issue notes moving forward, but what about the portfolio of notes already accumulated?  Would these need to be sold?

I'm fairly certain this approach wouldn't work as Lending Club pulls public record information to verify new investor accounts. If your information doesn't match they will probably deny you an account or request proof of residence.

I'd like to here from someone who is going to try it.

As far as the ramifications, I'm honestly not sure.

writing2reality

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Re: LC - State and Financial Suitability
« Reply #4 on: March 21, 2013, 10:01:05 AM »
Is anyone aware of the consequences of falsifying the mailing address in the way writing2reality is describing ?

For example, let's say I live in Arizona and have been investing in new issue LC notes (in violation of Arizona law, which says I can only invest in folioFN notes as an Arizona resident) but I list my mailing address as being Illinois (which allows full new issue and folioFN investing).

If Lending Club discovers my actual residence is in Arizona, what is Lending Club required to do?  Simply tell me I can't invest in new issue notes moving forward, but what about the portfolio of notes already accumulated?  Would these need to be sold?

I'm fairly certain this approach wouldn't work as Lending Club pulls public record information to verify new investor accounts. If your information doesn't match they will probably deny you an account or request proof of residence.

I'd like to here from someone who is going to try it.

As far as the ramifications, I'm honestly not sure.

@zpbsfg - I actually know of people who "send" their address to another state and have had zero complications in doing so. I can't necessarily recommend people do that (on the record). That being said, there have been zero ramifications for those people, but I would highly recommend you pick an address of someone you know, and would be comfortable forwarding your mail, should you get any. I do not believe that Lending Club is overly pressing on the address, verification of investors.

@jsmathur - Should Lending Club find out your actual address, I am sure they would handle this in a manner very similar to someone who moves from an eligible state to an ineligible state. You will no longer be able to invest in new notes. Since you used the Arizona/Illinois example, you would be able to sell/buy notes on the secondary market like normal.

Hope that helps!
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AmCap

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Re: LC - State and Financial Suitability
« Reply #5 on: March 21, 2013, 12:29:35 PM »
Is anyone aware of the consequences of falsifying the mailing address in the way writing2reality is describing ?

For example, let's say I live in Arizona and have been investing in new issue LC notes (in violation of Arizona law, which says I can only invest in folioFN notes as an Arizona resident) but I list my mailing address as being Illinois (which allows full new issue and folioFN investing).

If Lending Club discovers my actual residence is in Arizona, what is Lending Club required to do?  Simply tell me I can't invest in new issue notes moving forward, but what about the portfolio of notes already accumulated?  Would these need to be sold?

10-15 years in his majesty's custody! 

I think worst case LC could close your account...that should be spelled out in the investor agreement as an investor rep.