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Lending Club Discussion => Investors - LC => Topic started by: jdaun on May 09, 2016, 10:24:57 AM

Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jdaun on May 09, 2016, 10:24:57 AM
http://www.bloomberg.com/news/articles/2016-05-09/lendingclub-plunges-after-ceo-quits-firm-finds-loan-sale-abuse
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jdaun on May 09, 2016, 10:32:53 AM
Trying to understand what happened here ... details seem sparse.

From what little I can gather, LC knowingly sold $22 million in loans to an investor that didn't meet the investors criteria.  Am I on the right track?

Can anyone add a little more color/explanation to this?

A little more info ...   http://www.reuters.com/finance/stocks/LC/key-developments/article/3369102
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred on May 09, 2016, 10:33:39 AM
http://www.bloomberg.com/news/articles/2016-05-09/lendingclub-plunges-after-ceo-quits-firm-finds-loan-sale-abuse

Quote
The $22 million of near-prime loans were sold to Jefferies Group, which didn’t take a loss because LendingClub later repurchased them, according to a person familiar with the matter who asked not to be identified discussing a private transaction. The sale was found to be “in contravention of the investor’s express instructions,” San Francisco-based LendingClub said in the statement.

Ouch!

Perhaps people will be dumping notes in Folio soon.   Will be interesting to see Folio activities in the next few days.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 09, 2016, 10:46:42 AM
I'm not sure what is the bigger offense.  A) the board found that the company has falsified records in the deal with Jefferies.  B) The CEO owned a stake in a company he wanted LC to invest in and neglected to tell anyone about the conflict of interest.
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 09, 2016, 10:47:28 AM
Management changed the dates on the notes. My impression was they did this to fill an order that had to be done in a certain time frame. Manipulation of data is no good

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Quackhead on May 09, 2016, 11:10:12 AM
http://www.bloomberg.com/news/articles/2016-05-09/lendingclub-plunges-after-ceo-quits-firm-finds-loan-sale-abuse

Quote
The $22 million of near-prime loans were sold to Jefferies Group, which didn’t take a loss because LendingClub later repurchased them, according to a person familiar with the matter who asked not to be identified discussing a private transaction. The sale was found to be “in contravention of the investor’s express instructions,” San Francisco-based LendingClub said in the statement.

Ouch!

Perhaps people will be dumping notes in Folio soon.   Will be interesting to see Folio activities in the next few days.

Heck, if people are willing to sell some notes on Folio, Im willing to buy... at a discount of course ;-). I really dont see how this has any bearing on existing notes. I mean, how does this impact your typical LC (P2P) investor?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: yojoakak on May 09, 2016, 11:23:34 AM
I don't know who this Jefferies Group is but they recently reported a loss. I'm guessing they were scrambling to figure out how to make it less bad and discovered some questionable dealings with LC that they unwound. How this lead to Leplache's resignation, I don't quite understand. If LC wanted to unload some shitty loans, I don't know why they wouldn't just put them on the regular note platform or Folio. Never been a shortage of suckers there.

"How bad was the first-quarter market swoon? Ask the Jefferies Group’s chief executive, Richard B. Handler.

The Wall Street investment bank, a unit of the Leucadia National Corporation, reported a $166.7 million loss for its first fiscal quarter, which ended in February, as tumultuous markets slammed equity and fixed-income trading, junk bonds and leveraged lending. Investors drained money out of the market on fears of economic growth and China’s stability, and companies put a stop to capital-raising, forcing Jefferies to pull back until the markets recovered.

“We are humbled,” Mr. Handler said of the quarter...."

http://www.nytimes.com/2016/03/16/business/dealbook/jefferies-reports-166-7-million-loss-in-quarter.html

https://en.wikipedia.org/wiki/Jefferies_Group
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Ran on May 09, 2016, 11:44:27 AM
I would not go as far to put Jefferies as scapegoat. However, my take on this event is two folds:(1)it's not a financially significant event but LC made a huge deal out of it. That implies LC's internal control is not that bad considering it's a young company. And LC will definitely strengthen its internal controls and compliances. The new chairman Hans Harris was a executive at Citi and Visa, who carries a lot of experience on managing financial companies. This is actually a big plus for retail lenders concerning about platform risks. (2) the resigning CEO is a founder and his resign will cause some turnover inside LC and may hurt its growth aspect if the new CEO does not have the same sharp vision and leadership as him. And this is negative for LC stocks.

I don't know who this Jefferies Group is but they recently reported a loss. I'm guessing they were scrambling to figure out how to make it less bad and discovered some questionable dealings with LC that they unwound. How this lead to Leplache's resignation, I don't quite understand. If LC wanted to unload some shitty loans, I don't know why they wouldn't just put them on the regular note platform or Folio. Never been a shortage of suckers there.

"How bad was the first-quarter market swoon? Ask the Jefferies Group’s chief executive, Richard B. Handler.

The Wall Street investment bank, a unit of the Leucadia National Corporation, reported a $166.7 million loss for its first fiscal quarter, which ended in February, as tumultuous markets slammed equity and fixed-income trading, junk bonds and leveraged lending. Investors drained money out of the market on fears of economic growth and China’s stability, and companies put a stop to capital-raising, forcing Jefferies to pull back until the markets recovered.

“We are humbled,” Mr. Handler said of the quarter...."

http://www.nytimes.com/2016/03/16/business/dealbook/jefferies-reports-166-7-million-loss-in-quarter.html

https://en.wikipedia.org/wiki/Jefferies_Group
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 09, 2016, 11:47:38 AM
Quote
I don't know who this Jefferies Group is

They're one of the larger middle market investment banks out there. Quite well known in the investment banking space.

Quote
I'm guessing they were scrambling to figure out how to make it less bad and discovered some questionable dealings with LC that they unwound. How this lead to Leplache's resignation, I don't quite understand.

Reading between the lines, it's pretty clear that two things happened here:

1) Renaud and some senior managers were involved in changing the origination dates of the loans sold. Why would they do this? It's unclear, but perhaps they were under pressure to meet an earnings target or they had a funding squeeze. There are several possibilities and none are positive. This also points to a very poor internal controls system.

2) Renaud attempted to get LC to buy a fund or company that he was already an investor in without disclosing his interest. This is blatant deception.


Neither of the above two items are deal killers financially, but it raises a lot of questions about Lending Club. It sounds like Renaud was running it like his personal kingdom. What other chickens will come home to roost?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 09, 2016, 11:56:16 AM
How this lead to Leplache's resignation, I don't quite understand.
According to CNBC (which was according to unnamed sources) when the board started looking into the data manipulation, Laplache attempted to obfuscate and was "less than forthcoming." 

As rawraw said, "data manipulation is no good."  LC sells notes to investors based on trust.  Trust that they are giving us what they say they are giving us.  If they back dated a few loans to fulfill an order from an investment bank, what might they have done to us?

In another thread, someone called a potential run on the bank.  That's an apt metaphor.  If investors do not continue to add funds (let alone reinvest payments) then LC faces a funding crisis.  LC is barely profitable and they need capital to grow to a place where they can be profitable.  No investors = no growth.  No growth -> no capital.  No capital = no Lending Club.

Quote
I mean, how does this impact your typical LC (P2P) investor?
As discussed a bunch, the status of notes in a bankruptcy situation is uncertain.  No Lending Club = Bankruptcy which means we MIGHT or MIGHT NOT get paid on the notes we bought.

The board understand all of this.  Investors are the heart of LC and without them, the business is gone.  The best thing I see from this situation is that the board is strong and independent.  They grabbed the bull by the horns, and fired a wildly popular CEO.  The band-aid got ripped off and they hope to move on.  If they let this fester, they ran the risk of the WSJ/whoever scooping this which would have been worse.  In doing what they did, they are signaling to investors that the board has their back. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: BruiserB on May 09, 2016, 12:16:25 PM
Just listened to the replay of the conference call.  Wasn't able to learn much beyond what's been reported, but it is clear that the management team in place made a tough decision to do the right thing.  That raises my confidence.  But the uncertainty on how other investors will perceive this and the possibility that there may yet be fire from the smoke shakes my confidence.  A sad day for sure, hopefully not a disastrous one.

Wondering how the results would have been perceived absent this news?  Seems like things were in line with expectations.  I've always been bothered by LC's seeming obsession with managing loan issuance to manage results....wondering if the impropriety was related to that, especially since it seems to have been at very end of Q1 and beginning of Q2.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 09, 2016, 12:43:48 PM
Quote
I've always been bothered by LC's seeming obsession with managing loan issuance to manage results....wondering if the impropriety was related to that, especially since it seems to have been at very end of Q1 and beginning of Q2

I've always laughed at how people have touted this as a good thing. "Look how smooth Lending Club's originations are vs. Prosper." It's been clear from very early on that LC has manipulated its originations to paint a favorable picture to investors. While massaging the origination data, i.e. pushing forward or back loan issuance a few days, isn't the end of the world, it makes me wonder what else they've been manipulating. Didn't their Chief Risk Officer leave recently too?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: elumbra on May 09, 2016, 01:06:32 PM
Just got this from Lending Robot.  Anyone with a Lending Robot account probably got this as well.
Quote
Dear client,

You may have heard the news that Lending Club’s CEO Renaud Laplanche was forced to resign this morning, following the discovery of an improper sale of loans to an institutional investor.

Here’s the impact for individual investors in general, and LendingRobot clients in particular: zero.

That deal concerns institutional investors, and sadly illustrates the risks of dealing with ‘packages’ of loans rather than managing portfolios on a loan-per-loan basis. In addition, the underwriting of the loans themselves is not in question, only that the package of loans sold did not match the investor's investment criteria. No money was embezzled.

By using LendingRobot, you have access to individual loans, not opaque bundles. Furthermore, Lending Club assets are held by an independent third party, a qualified custodian, which means they can’t misrepresent the notes and cash in your account.

Today, like it happened yesterday and will happen again tomorrow, hundreds of thousands of borrowers will make a payment towards their Lending Club loans, some of them trickling down to your account as they should. It has nothing to do with the Lending Club stock price, and we still have the utmost trust in the management of this company.

Steady returns,
The LendingRobot Team
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 09, 2016, 01:58:31 PM
Didn't LC raise interest rates sometime in April. I wonder if Jefferies wanted to buy higher interest notes and LC changed origination dates on older notes to look like they had higher interest rate???
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lascott on May 09, 2016, 02:58:22 PM
I would not go as far to put Jefferies as scapegoat. However, my take on this event is two folds:(1)it's not a financially significant event but LC made a huge deal out of it. That implies LC's internal control is not that bad considering it's a young company. And LC will definitely strengthen its internal controls and compliances. The new chairman Hans Harris was a executive at Citi and Visa, who carries a lot of experience on managing financial companies. This is actually a big plus for retail lenders concerning about platform risks. (2) the resigning CEO is a founder and his resign will cause some turnover inside LC and may hurt its growth aspect if the new CEO does not have the same sharp vision and leadership as him. And this is negative for LC stocks.

I don't know who this Jefferies Group is but they recently reported a loss. I'm guessing they were scrambling to figure out how to make it less bad and discovered some questionable dealings with LC that they unwound. How this lead to Leplache's resignation, I don't quite understand. If LC wanted to unload some shitty loans, I don't know why they wouldn't just put them on the regular note platform or Folio. Never been a shortage of suckers there.

"How bad was the first-quarter market swoon? Ask the Jefferies Group’s chief executive, Richard B. Handler.

The Wall Street investment bank, a unit of the Leucadia National Corporation, reported a $166.7 million loss for its first fiscal quarter, which ended in February, as tumultuous markets slammed equity and fixed-income trading, junk bonds and leveraged lending. Investors drained money out of the market on fears of economic growth and China’s stability, and companies put a stop to capital-raising, forcing Jefferies to pull back until the markets recovered.

“We are humbled,” Mr. Handler said of the quarter...."

http://www.nytimes.com/2016/03/16/business/dealbook/jefferies-reports-166-7-million-loss-in-quarter.html

https://en.wikipedia.org/wiki/Jefferies_Group

Hans Morris not Hans Harris

https://www.lendingclub.com/public/board-of-directors.action

Quote
Hans Morris
General Atlantic

Hans Morris served as president of Visa Inc. from 2007 to 2009, where his primary responsibilities included managing all markets in which Visa did business. Hans tenure coincided with the global payments technology company’s initial public offering and a reorganization that merged several separate businesses into a new company.

Hans previously spent 27 years at Citigroup and its predecessor companies in assorted leadership positions, with his final position as CFO and head of finance, technology and operations for Citi Markets and Banking. He is currently an advisory director at growth equity firm General Atlantic, where he leads investments in the financial services industry and is a director for three portfolio companies.

Morris graduated cum laude from Dartmouth College in 1980. He serves as chairman of the board of trustees of the Massachusetts Museum of Contemporary Art (MASS MoCA), a trustee of the Jacobs Pillow Dance Festival, and is chairman of the board of overseers at the Hopkins Center for the Arts at Dartmouth College.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: BruiserB on May 09, 2016, 03:02:36 PM
Didn't LC raise interest rates sometime in April. I wonder if Jefferies wanted to buy higher interest notes and LC changed origination dates on older notes to look like they had higher interest rate???

They did specifically state that the incident had nothing to do with pricing or risk of the notes issued.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: yojoakak on May 09, 2016, 03:16:45 PM
From the 8-K:

"The loans in question failed to conform to the investor’s express instructions as to a non-credit and non-pricing element. "


What does this mean?

http://ir.lendingclub.com/Cache/c34233919.html
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mo on May 09, 2016, 03:22:56 PM
Trying to understand what happened here ... details seem sparse.

Here is an article from the WSJ

http://www.wsj.com/articles/lendingclub-ceo-resigns-over-sales-review-1462795070

"The board found that some people at the company knew the loans didn’t meet the investor’s criteria and that the application date on $3 million of those loans had been altered to make them comply."

Note it was the application dates that were altered _not_ the origination date.  Given how LC continuously monitors credit scores I wonder if perhaps someone looked at the loans in question and saw that if you looked back or forward a bit the FICO met the investors criteria so they fudged the application date.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 09, 2016, 03:25:16 PM
What I don't get is why fudge the numbers for such a small amount? $3mn in loans is nothing to LC. There has to be more to the story. Unfortunately, I don't think the "more" will be good news.
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Ran on May 09, 2016, 03:41:55 PM
From the 8-K:

"The loans in question failed to conform to the investor’s express instructions as to a non-credit and non-pricing element. "


What does this mean?

http://ir.lendingclub.com/Cache/c34233919.html
I suspect this meant LC did not defraud investor by credit or risk criteria, but other loan data, which based on the early news is loan application date. Since LC now implements cooling period between application date and loan issue date, they may predate application date so that there will be enough loans pooled to deliver to that particular investor. It's actually a good thing to not having enough loans to meet investor demand, but forging data is just too wrong to justify for that.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: WES on May 09, 2016, 03:50:19 PM
It's not the origination dates, although that's stupidly bad. It's the self-dealing via Citrix. Laplanche can't sail away from this mess. Looks like the yacht may be up for sale soon.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 09, 2016, 05:13:39 PM
What I don't get is why fudge the numbers for such a small amount? $3mn in loans is nothing to LC. There has to be more to the story. Unfortunately, I don't think the "more" will be good news.

EXACTLY that's the smoke!  The fire is that RL and Mack were both invested in a fund that bought LC Loans and DID NOT disclose it..wow wow wow
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mo on May 09, 2016, 05:19:41 PM
What I don't get is why fudge the numbers for such a small amount? $3mn in loans is nothing to LC. There has to be more to the story. Unfortunately, I don't think the "more" will be good news.

EXACTLY that's the smoke!  The fire is that RL and Mack were both invested in a fund that bought LC Loans and DID NOT disclose it..wow wow wow

Why is that the fire?  I mean it isn't particularly ethical to not disclose that but on the other hand would anyone be surprised to find Bill Gates used Windows?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 09, 2016, 05:22:22 PM
Cherry picking the best loans for the fund.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 09, 2016, 05:28:59 PM
Just in case John Mack's involvement is new news here's the source:

http://www.bloomberg.com/news/articles/2016-05-09/mack-invested-with-former-lendingclub-ceo-in-loan-buying-venture (http://www.bloomberg.com/news/articles/2016-05-09/mack-invested-with-former-lendingclub-ceo-in-loan-buying-venture)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: PhilGD on May 09, 2016, 05:42:25 PM
Cherry picking the best loans for the fund.

I could see this being true if they took advantage of data that's not publicly available to loan investors.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 09, 2016, 05:45:52 PM
If Renaud and Mack were truly "cherry picking"  the best loans and selling the rest to investors this seems like a criminal issue. At the very least, Mack should be forced to resign from the LC board immediately.  >:(
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 09, 2016, 05:47:13 PM
What I don't get is why fudge the numbers for such a small amount? $3mn in loans is nothing to LC. There has to be more to the story. Unfortunately, I don't think the "more" will be good news.

EXACTLY that's the smoke!  The fire is that RL and Mack were both invested in a fund that bought LC Loans and DID NOT disclose it..wow wow wow

Why is that the fire?  I mean it isn't particularly ethical to not disclose that but on the other hand would anyone be surprised to find Bill Gates used Windows?
Because they are a public company with a duty to shareholders.  This is why the Board exists.  That would be very illegal what he was trying to do.  I was impressed with the Board's action, like others have said.  But fraud is often found in fast growing financials in distressed times.  So typical financial investors see these things are signs of a downturn.  It's the worst thing I could think of that impacts sentiment but not financial results.

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 09, 2016, 05:57:13 PM
If Renaud and Mack were truly "cherry picking"  the best loans and selling the rest to investors this seems like a criminal issue. At the very least, Mack should be forced to resign from the LC board immediately.  >:(

Correct -appears very close to criminal if not outright criminal. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 09, 2016, 06:00:33 PM
If Renaud and Mack were truly "cherry picking"  the best loans and selling the rest to investors this seems like a criminal issue. At the very least, Mack should be forced to resign from the LC board immediately.  >:(

Correct -appears very close to criminal if not outright criminal.

No evidence of that.  You're speculating/fantasizing.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 09, 2016, 06:00:48 PM
It's not the origination dates, although that's stupidly bad. It's the self-dealing via Citrix. Laplanche can't sail away from this mess. Looks like the yacht may be up for sale soon.

LOL-yes maybe someone can get a loan from lending club it buy it!
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 09, 2016, 06:08:13 PM
On the other hand you can see why Mack would be extremely "distressed" (or stronger language) to learn after the fact that he'd been placed in a position of conflict by RL. That's a big part of why RL was fired? It was personal?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 09, 2016, 06:28:00 PM
On the other hand you can see why Mack would be extremely "distressed" (or stronger language) to learn after the fact that he'd been placed in a position of conflict by RL. That's a big part of why RL was fired? It was personal?

If RL was involved in "data manipulation" and "having LC invest into his fund without disclosure", I wont feel sorry for his departure. I just never expected this to happen, really a big surprise - lets wait for more details:(
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 09, 2016, 06:29:17 PM
Quote
On the other hand you can see why Mack would be extremely "distressed" (or stronger language) to learn after the fact that he'd been placed in a position of conflict by RL.

Mack never should have invested in a fund that was selectively buying LC loans. That's a clear conflict of interest. He absolutely should know better than that. I don't see how they can let him stay on the board.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 09, 2016, 06:35:44 PM
What did Mack know and when did he know it?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: bcartpa on May 09, 2016, 06:40:37 PM
Quote
Because they are a public company with a duty to shareholders.  This is why the Board exists.  That would be very illegal what he was trying to do.  I was impressed with the Board's action, like others have said.  But fraud is often found in fast growing financials in distressed times.  So typical financial investors see these things are signs of a downturn.  It's the worst thing I could think of that impacts sentiment but not financial results.

I agree.  I am encouraged by the Board's actions. 

At these prices, Lending Club could be an acquisition target by a larger FiServ player.  The future cash flow LC is set up to receive from all of the existing notes makes it very interesting.  I don't own any LC stock but I will strongly consider buying at these levels.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 09, 2016, 06:43:05 PM
I don't own any LC stock but I will strongly consider buying at these levels.

Gee, I wish you the best with that.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: PhilGD on May 09, 2016, 07:18:51 PM

At these prices, Lending Club could be an acquisition target by a larger FiServ player. The future cash flow LC is set up to receive from all of the existing notes makes it very interesting.  I don't own any LC stock but I will strongly consider buying at these levels.

That would suck if you ask me. I think chances are good that any acquirer would shut down retail investing operations. Then all of us would be forced to watch our portfolios wind down and all the fun of note selection would end.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: andy3109 on May 09, 2016, 07:20:39 PM
I took a wild gamble and bought 2K lending club today @ $5.00. I'm not convinced that this will end LC with the amount of loans on the books and the customer base. I think average case, the stock goes between 3 and 7 dollars over the next year. Optimistic case the stock reaches $10 in a few years or is bought out for a premium.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lender90530 on May 09, 2016, 07:55:13 PM
If the new management team has half a brain they would institute a BRV for retail lenders to add confidence. I know I would not invest another dime in this company without one.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 09, 2016, 07:59:18 PM
I took a wild gamble and bought 2K lending club today @ $5.00. I'm not convinced that this will end LC with the amount of loans on the books and the customer base. I think average case, the stock goes between 3 and 7 dollars over the next year. Optimistic case the stock reaches $10 in a few years or is bought out for a premium.

There are no loans on the books...........this is becoming amusing
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 09, 2016, 08:38:34 PM
And the hits just keep on coming (SEC inquiry):
http://www.bloomberg.com/news/articles/2016-05-09/sec-enforcement-division-said-to-review-lendingclub-disclosures-io0hbhe5 (http://www.bloomberg.com/news/articles/2016-05-09/sec-enforcement-division-said-to-review-lendingclub-disclosures-io0hbhe5)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 09, 2016, 08:48:06 PM
If the new management team has half a brain they would institute a BRV for retail lenders to add confidence. I know I would not invest another dime in this company without one.

Same for me. I haven't reinvested for a while since I was concerned about credit quality, but with today's news I will absolutely never invest again until retail investors are protected by a bankruptcy remote vehicle. There is simply too much risk under the current structure.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred on May 09, 2016, 11:54:31 PM
I took a wild gamble and bought 2K lending club today @ $5.00.

If you really wanted to gamble, get the $5.0 call and $4.0 put. You can reap a harvest as early as tomorrow if the volatility continues, ;-)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 10, 2016, 01:52:45 AM
How would you guys think about Scott Sanborn?

http://seekingalpha.com/article/3973359-lendingclubs-lc-management-q1-2016-results-earnings-call-transcript?page=1

Scott Sanborn
I recognize, we’ve given everybody a lot to digest this morning. I hope we’ve answered many of your questions, but I’m sure you’re all going to have more in the days and weeks ahead. LendingClub is always operated with transparency and it is our commitment to do so going forward. And so our intention is to schedule as many investor meetings as we can in the next few weeks. In the meantime, if you have questions, please don’t hesitate to reach out to me, James or Carrie. We thank everybody for their confidence and support.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 10, 2016, 07:55:28 AM
I took a wild gamble and bought 2K lending club today @ $5.00. I'm not convinced that this will end LC with the amount of loans on the books and the customer base. I think average case, the stock goes between 3 and 7 dollars over the next year. Optimistic case the stock reaches $10 in a few years or is bought out for a premium.

LC trading at ~2x cash on hand and ~3.5x revenues.  I yielded to the temptation, likewise.

(ETA:  I am not advocating that others do the same.  Risk tolerances, et cetera, et cetera...)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 10, 2016, 09:39:45 AM
Quote
How would you guys think about Scott Sanborn?

I've met Scott a few times and have talked to people that work with him. He's a thoughtful guy and basically runs a lot of LC's operations behind the scenes. LC is very lucky that they have a guy like Scott available to step in.

The problem is Renaud was the face of the company. He was great at marketing, speaking to investing and regulators, and setting LC's direction. I'm not sure Scott can ever be that guy. LC also canned Jeff Bogan who established many of the institutional relationships that LC has. Also, many of LC's mid to senior people left after the IPO, already depleting the talent pool. It isn't easy to replace senior people like this.

It's going to be a tough year for LC. Scott can steady the ship but where it goes after that I don't know.
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 10, 2016, 09:41:28 AM
I considered it but decided against it. Just like banks, the current LC model is subject to negative feedback loops. Given the age of the industry, I think it's unwise to invest since we have no idea how suppliers of capital will react. Maybe if we get to quarter end and LC is still throttling volumes, I'll consider it.

 Otherwise I think this is an extremely important lesson on the stickiness of retail and institutional and I'm not fond of investing before I learn the necessary lessons. That cash can disappear quick if they start operating at losses.  After 2q, I may consider it.

The lack of visibility in the downside makes it inappropriate investment for me personally, since I have no idea of the odds of either scenario.

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 10, 2016, 10:00:02 AM
I debated buying a little yesterday with some spare dividend fund sitting around in my one account, but didn't.  Sunk 10% after that and down 12% this morning. It's sure getting hammered.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 10, 2016, 10:07:55 AM
Touched $3.98.  Blood on the street!
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: WES on May 10, 2016, 10:38:58 AM
Laplanche & three others. SF Chron names Jeff Bogan, Adelina Grozdanova. Who is the other LC'er axed?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 10, 2016, 12:38:46 PM
Quote
How would you guys think about Scott Sanborn?

I've met Scott a few times and have talked to people that work with him. He's a thoughtful guy and basically runs a lot of LC's operations behind the scenes. LC is very lucky that they have a guy like Scott available to step in.

The problem is Renaud was the face of the company. He was great at marketing, speaking to investing and regulators, and setting LC's direction. I'm not sure Scott can ever be that guy. LC also canned Jeff Bogan who established many of the institutional relationships that LC has. Also, many of LC's mid to senior people left after the IPO, already depleting the talent pool. It isn't easy to replace senior people like this.

It's going to be a tough year for LC. Scott can steady the ship but where it goes after that I don't know.

I think u are right, it is seriously bleeding for LC to lose RL and three senior managers. I still did not understand why they made such stupid mistake - they have been working in this industry for nine years!
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Nagu on May 10, 2016, 01:01:22 PM
Personally think that Renaud being kicked out is a good thing. The way things sound he ran the company underhandedly and at his own discretion.  Can't believe the board was too happy with him either, losing 8 billion in market cap won't make you any friends. He was too popular to just boot and this scandal gave them the smoking gun to do what they did. Also notice they didn't give him a golden parachute. Only question now is, are there anymore skeletons in the closet?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 10, 2016, 01:22:12 PM
Arrogance is the only reasonable explanation for the downfall of RL. 

BTW I could not resist the temptation to buy at $4. 

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 10, 2016, 01:23:59 PM
I considered it but decided against it. Just like banks, the current LC model is subject to negative feedback loops. Given the age of the industry, I think it's unwise to invest since we have no idea how suppliers of capital will react.

Suppliers of capital will continue to invest as long as they see outsized, risk adjusted returns.  And the beauty of those returns lie in the eye of the beholder...
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hfguy on May 10, 2016, 02:20:46 PM
I took a wild gamble and bought 2K lending club today @ $5.00. I'm not convinced that this will end LC with the amount of loans on the books and the customer base. I think average case, the stock goes between 3 and 7 dollars over the next year. Optimistic case the stock reaches $10 in a few years or is bought out for a premium.

LC trading at ~2x cash on hand and ~3.5x revenues.  I yielded to the temptation, likewise.

(ETA:  I am not advocating that others do the same.  Risk tolerances, et cetera, et cetera...)

Bookmarked...again.  ;)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 10, 2016, 03:05:15 PM
Perhaps people will be dumping notes in Folio soon.   Will be interesting to see Folio activities in the next few days.

Any signs yet of more than the usual number of lenders looking for the exits via Folio?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 10, 2016, 03:11:56 PM
Interesting color on the loan application date changes:

http://www.bloomberg.com/news/articles/2016-05-10/jefferies-said-to-have-pressed-lendingclub-to-improve-disclosure

They bought them back - packaged them correctly with the disclosures the borrowers actually got - and then resold 'em, but, that first
sale to Jefferies?  That was not "abuse", that sounds a lot like securities fraud on the loan buyers and loan fraud against the borrows.

Nope.  I'm out.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: yojoakak on May 10, 2016, 03:16:23 PM
Any signs yet of more than the usual number of lenders looking for the exits via Folio?

If there are, they're setting unrealistically high markups.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 10, 2016, 03:28:18 PM
Interesting color on the loan application date changes:

http://www.bloomberg.com/news/articles/2016-05-10/jefferies-said-to-have-pressed-lendingclub-to-improve-disclosure

Finally an explanation as to why these dates were so important.  Thanks for the link.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 10, 2016, 03:32:34 PM
Interesting color on the loan application date changes:

http://www.bloomberg.com/news/articles/2016-05-10/jefferies-said-to-have-pressed-lendingclub-to-improve-disclosure

Article also says Jeffries and GS are pausing their LC purchases.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: PhilGD on May 10, 2016, 05:27:29 PM
Interesting color on the loan application date changes:

http://www.bloomberg.com/news/articles/2016-05-10/jefferies-said-to-have-pressed-lendingclub-to-improve-disclosure

They bought them back - packaged them correctly with the disclosures the borrowers actually got - and then resold 'em, but, that first
sale to Jefferies?  That was not "abuse", that sounds a lot like securities fraud on the loan buyers and loan fraud against the borrows.

Nope.  I'm out.

The way this is going it sounds like certain LC decision makers were pretty irrational/immature in thinking that this date change crap was was going to fly. The type of person that would do something like this, is the kind of person that makes poor judgement calls constantly. I hope it doesn't reflect a larger culture of stupidity/laziness at LC.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 10, 2016, 06:02:30 PM
I considered it but decided against it. Just like banks, the current LC model is subject to negative feedback loops. Given the age of the industry, I think it's unwise to invest since we have no idea how suppliers of capital will react.

Suppliers of capital will continue to invest as long as they see outsized, risk adjusted returns.  And the beauty of those returns lie in the eye of the beholder...
Sorry, but it appears you don't understand financial institutions and the requirements they are under for third party relationships. Note that Jeffries and Goldman already paused.

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 10, 2016, 06:26:12 PM
I considered it but decided against it. Just like banks, the current LC model is subject to negative feedback loops. Given the age of the industry, I think it's unwise to invest since we have no idea how suppliers of capital will react.

Suppliers of capital will continue to invest as long as they see outsized, risk adjusted returns.  And the beauty of those returns lie in the eye of the beholder...
Sorry, but it appears you don't understand financial institutions and the requirements they are under for third party relationships. Note that Jeffries and Goldman ^already paused.

Sent from my SAMSUNG-SM-G935A using Tapatalk

It appears that you don't understand Jefferies and Goldman's role in these securitizations.  They are bundling up the loans to sell to investors.  They are the middle men.  Most importantly, it remains to be seen how long the the chill lasts...
"Suppliers of capital will continue to invest as long as they see outsized, risk adjusted return"  So suddenly the securitization market has frozen over?  You think Goldman's fees magically changed?

I make it a point not to argue on online  forums.  But I'm making an exception, since I assume there are likely a few people trying to read this and understand the actual risks involved for LC and what that means for their investments.  Financial institutions, depending on the type, are governed by more than attractive looking returns like is being suggested in this thread.  They are also focused on risk to those returns, both compliance, credit, and otherwise.  These risks are governed by policies and procedures set forth by the Board and subcommittees. 

Notice how LC talked about banks filling the volume in 1Q16.  Well, banks are highly regulated and have specific rules and expectations with third party relationships (for example, http://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html).  Importantly, this third party relationship with peer lenders has been discussed by all three regulators in the past few months.  The fact that this is all over the news means that every bank involved with LC will likely be getting a friendly contact from their neighborhood regulator case manager.  This could all be fine, or volumes can drop off the cliff as they perform their due diligence and cover their behinds.  Like I stated previously, this is the first time its happened and there is no visibility into what will happen.  But these are the possibilities -- everyone can decide for themselves what probability they assign to those risks and how they react.  But unfortunately if you wait until the visibility is clear and that probability ends up being high, will likely be harder to get out then vs now when you still have people saying that "only returns matter" and "beauty is in the eye of the beholder."  Perhaps this gentleman will buy all the notes of concerned posters.  Good luck to him, as I expect LC will survive.  But in my view, the probability of that survival has materially changed.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: brother7 on May 10, 2016, 06:27:42 PM
FYI, the new LC management team page: https://www.lendingclub.com/public/company-leadership.action
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 10, 2016, 06:33:09 PM
I considered it but decided against it. Just like banks, the current LC model is subject to negative feedback loops. Given the age of the industry, I think it's unwise to invest since we have no idea how suppliers of capital will react.

Suppliers of capital will continue to invest as long as they see outsized, risk adjusted returns.  And the beauty of those returns lie in the eye of the beholder...
Sorry, but it appears you don't understand financial institutions and the requirements they are under for third party relationships. Note that Jeffries and Goldman ^already paused.

Sent from my SAMSUNG-SM-G935A using Tapatalk

It appears that you don't understand Jefferies and Goldman's role in these securitizations.  They are bundling up the loans to sell to investors.  They are the middle men.  Most importantly, it remains to be seen how long the the chill lasts...
"Suppliers of capital will continue to invest as long as they see outsized, risk adjusted return"  So suddenly the securitization market has frozen over?  You think Goldman's fees magically changed?

I make it a point not to argue on online  forums.  But I'm making an exception, since I assume there are likely a few people trying to read this and understand the actual risks involved for LC and what that means for their investments.  Financial institutions, depending on the type, are governed by more than attractive looking returns like is being suggested in this thread.  They are also focused on risk to those returns, both compliance, credit, and otherwise.  These risks are governed by policies and procedures set forth by the Board and subcommittees. 

Notice how LC talked about banks filling the volume in 1Q16.  Well, banks are highly regulated and have specific rules and expectations with third party relationships (for example, http://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html).  Importantly, this third party relationship with peer lenders has been discussed by all three regulators in the past few months.  The fact that this is all over means that every bank involved with LC will likely be getting a friendly contact from their neighborhood regulator case manager.  This could all be fine, or volumes can drop off the cliff as they perform their due diligence and cover their behinds.  Like I stated previously, this is the first time its happened and there is no visibility into what will happen.  But these are the possibilities -- everyone can decide for themselves what probability they assign to those risks and how they react.  But unfortunately if you wait until the visibility is clear and that probability ends up being high, will likely be harder to get out then vs now when you still have people saying that "only returns matter" and "beauty is in the eye of the beholder."  Perhaps this gentleman will buy all the notes of concerned posters.  Good luck to him, as I expect LC will survive.  But in my view, the probability of that survival has materially changed.

Nothing I hear from you or anywhere else has anything to do with the returns on the notes.  That's what investors care about.  In fact, as investors flee, the yields should improve.  Surely you understand that.

Richard Cordray and his merry band of regulators may clamp down on the industry.  Too bad for the companies involved in P2P lending, but moreso to bad for us the investors who benefit from this asset class.   :'(
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lascott on May 10, 2016, 06:57:50 PM
FYI, the new LC management team page: https://www.lendingclub.com/public/company-leadership.action
Image: http://i.imgur.com/1XXZt36.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F1XXZt36.png&hash=5a6e9eab0153d4fbe8c546566ebff358)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: BruiserB on May 10, 2016, 08:08:44 PM
On seeing the above, I was wondering if Tim Bogan and Jeff Bogan were related.  Googled it and found this slide:

http://www.businessinsider.sg/fintech-wall-street-banks-startups-hiring-2016-1/7/#.VzJ3cXErLnA

Apparently they are not. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 10, 2016, 09:51:36 PM
I considered it but decided against it. Just like banks, the current LC model is subject to negative feedback loops. Given the age of the industry, I think it's unwise to invest since we have no idea how suppliers of capital will react.

Suppliers of capital will continue to invest as long as they see outsized, risk adjusted returns.  And the beauty of those returns lie in the eye of the beholder...
Sorry, but it appears you don't understand financial institutions and the requirements they are under for third party relationships. Note that Jeffries and Goldman ^already paused.

Sent from my SAMSUNG-SM-G935A using Tapatalk

It appears that you don't understand Jefferies and Goldman's role in these securitizations.  They are bundling up the loans to sell to investors.  They are the middle men.  Most importantly, it remains to be seen how long the the chill lasts...
"Suppliers of capital will continue to invest as long as they see outsized, risk adjusted return"  So suddenly the securitization market has frozen over?  You think Goldman's fees magically changed?

I make it a point not to argue on online  forums.  But I'm making an exception, since I assume there are likely a few people trying to read this and understand the actual risks involved for LC and what that means for their investments.  Financial institutions, depending on the type, are governed by more than attractive looking returns like is being suggested in this thread.  They are also focused on risk to those returns, both compliance, credit, and otherwise.  These risks are governed by policies and procedures set forth by the Board and subcommittees. 

Notice how LC talked about banks filling the volume in 1Q16.  Well, banks are highly regulated and have specific rules and expectations with third party relationships (for example, http://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html).  Importantly, this third party relationship with peer lenders has been discussed by all three regulators in the past few months.  The fact that this is all over means that every bank involved with LC will likely be getting a friendly contact from their neighborhood regulator case manager.  This could all be fine, or volumes can drop off the cliff as they perform their due diligence and cover their behinds.  Like I stated previously, this is the first time its happened and there is no visibility into what will happen.  But these are the possibilities -- everyone can decide for themselves what probability they assign to those risks and how they react.  But unfortunately if you wait until the visibility is clear and that probability ends up being high, will likely be harder to get out then vs now when you still have people saying that "only returns matter" and "beauty is in the eye of the beholder."  Perhaps this gentleman will buy all the notes of concerned posters.  Good luck to him, as I expect LC will survive.  But in my view, the probability of that survival has materially changed.

Nothing I hear from you or anywhere else has anything to do with the returns on the notes.  That's what investors care about.  In fact, as investors flee, the yields should improve.  Surely you understand that.

Richard Cordray and his merry band of regulators may clamp down on the industry.  Too bad for the companies involved in P2P lending, but moreso to bad for us the investors who benefit from this asset class.   :'(


The problem is that you view regulation in this manner.  But, the fact is,  Mack is a repeat offender, was at helm of MS during the financial crisis of 2008, was not held accountable and.... here he is again-held in high esteem and a board member-yet does the same crap.  I can't blame you for viewing regulation in this manner because, it is, indeed a joke.  You would benefit, as would all investors, from real regulation.  But that will never happen given politics and reality.  I think we all want a reasonable solution. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 10, 2016, 10:08:46 PM
Mack is a repeat offender, was at helm of MS during the financial crisis of 2008, was not held accountable and.... here he is again-held in high esteem and a board member-yet does the same crap.

I don't see anything remotely similar.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 10, 2016, 10:14:34 PM
Sounds like securitizations and institutional money is drying up, see Jeffries and GS deals above. I think LC will have to do another round of interest rate increases in order to compensate for higher risk (whether perceived or real) and in order to bring back investors.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 10, 2016, 10:32:24 PM
Mack is a repeat offender, was at helm of MS during the financial crisis of 2008, was not held accountable and.... here he is again-held in high esteem and a board member-yet does the same crap.

I don't see anything remotely similar.

I don't either. broad40 - I'm sure Bernie appreciates your support.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: RaymondG on May 10, 2016, 10:41:18 PM
Perhaps people will be dumping notes in Folio soon.   Will be interesting to see Folio activities in the next few days.

Any signs yet of more than the usual number of lenders looking for the exits via Folio?
I am having trouble to open "Browser Notes" page of FolioFn. The IE browser has been hanging there for several minutes. Too many notes on sale? I have no trouble to open "Sell Notes" page though.

Update: 
10:45PM EST - "Browser Notes" page is available now.
10:47PM EST - Can not browse from LC to FolioFn. I was logged out and brought to LC's Login page.
11:20PM EST - FolioFn is back. But same issue with "Browser Notes" page.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 10, 2016, 11:03:03 PM
Not working here either
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: bobeubanks on May 10, 2016, 11:03:45 PM
broad40 - I'm sure Bernie appreciates your support.

Are you really that daft? Adam Smith believed in regulation.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: newstreet on May 10, 2016, 11:16:30 PM
It appears they are.......

Look I worked for an institution investor who is/was one the of the biggest buyers of LC notes.  I'm here because it is like a train wreck (I can't look away regardless of how hard I try)and I always try to learn more about investor psychology- it's endless. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred on May 11, 2016, 02:49:51 AM
Perhaps people will be dumping notes in Folio soon.   Will be interesting to see Folio activities in the next few days.

Any signs yet of more than the usual number of lenders looking for the exits via Folio?

Yesterday was still normal; however, looks like Folio is inundated today.

Usually I see around 300,000 notes in Folio; today at 6pm Pacific I saw 390,000+ notes, more than 30% increase.

FolioFn has been down since 6pm. ;-(
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 11, 2016, 03:35:59 AM
A Bloomberg article tonite raises some good questions...

http://www.bloomberg.com/news/articles/2016-05-11/lendingclub-struggles-to-assure-investors-as-bond-deals-stall
“The more we learn, the less we understand about the actions taken by the board,” Henry Coffey, an analyst at Sterne Agee CRT, wrote in a note to investors after cutting his rating to “underperform.”

LendingClub bought back loans with altered dates from the buyer, Jefferies, and could’ve handled the incident internally as a “bad delivery,” he wrote. Laplanche’s other alleged sin stemmed from his investment in a fund that bought LendingClub’s own products. “Again why was this not simply treated as a misstep in disclosure?” Coffey wrote.


Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 11, 2016, 09:37:15 AM
A Bloomberg article tonite raises some good questions...

http://www.bloomberg.com/news/articles/2016-05-11/lendingclub-struggles-to-assure-investors-as-bond-deals-stall
“The more we learn, the less we understand about the actions taken by the board,” Henry Coffey, an analyst at Sterne Agee CRT, wrote in a note to investors after cutting his rating to “underperform.”

LendingClub bought back loans with altered dates from the buyer, Jefferies, and could’ve handled the incident internally as a “bad delivery,” he wrote. Laplanche’s other alleged sin stemmed from his investment in a fund that bought LendingClub’s own products. “Again why was this not simply treated as a misstep in disclosure?” Coffey wrote.

Note to self: Don't do business with Sterne Agee.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 11, 2016, 09:45:30 AM
The whole affair is rather strange. Why fire Renaud but keep Mack, who effectively is guilty of the same crime? There is either more to the story or this is a true boardroom coup.

Either way the company has totally mishandled the situation. Unbelievable how LC could go from being considered one of the most innovative, high growth financial companies to one fighting for its survival in a matter of a week.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 11, 2016, 09:53:24 AM
Mack was not part of the Risk Committee and did not know of LC purchase until after the fact.  The Risk Committee is the one that approved the purchase after RL gave the presentation without notifying them of the conflict of interest.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 11, 2016, 10:24:22 AM
Quote
Mack was not part of the Risk Committee and did not know of LC purchase until after the fact. 

Sure seems strange that he wouldn't know. Sounds like selective ignorance to me. A guy like Mack would know how to play that game.

More to the point, why would Mack or anybody else at LC ever be allowed to invest in vehicles that selectively buy LC notes? This is a clear conflict of interest. Why is LC even investing in such vehicles? LC really hasn't given any great answers here, which is investor doubts will continue to linger.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 11, 2016, 10:58:07 AM
Sure seems strange that he wouldn't know. Sounds like selective ignorance to me. A guy like Mack would know how to play that game.
Being a board member is not a full time job.  It is usually a few hours a month.  Neither is being a limited partner in an investment fund (you are a passive observer with no say in how things are done).  It is very plausible that he didn't know.

Quote
More to the point, why would Mack or anybody else at LC ever be allowed to invest in vehicles that selectively buy LC notes? This is a clear conflict of interest.
As long as they are not involved with the picking of notes and at arms length, then this is not a problem.  Yes it can be a bit shady, but the compliance department and Board's Risk Committee should ensure that the employees are not doing anything illegal or unethical. 

GM allows employees to buy GM cars because they believe GM cars are great and add value.  Why wouldn't LC allow employees to invest in their product as long as they are not using inside information?

Quote
Why is LC even investing in such vehicles? LC really hasn't given any great answers here, which is investor doubts will continue to linger.
THAT is the good question!  I wondered if this was the LC investment vehicle and not the LC corporation.  If it was the corporation, then it blows the whole "we don't take any loan credit risk" off the table.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 11, 2016, 12:18:26 PM
This looks pretty fucked up.  I assumed board coup, but then Mack left his prints all over the knife and called into question the cash as well
as whether or not LC has been levering up to buy its own loans.  "Board coup" is now inching closer to "these guys even suck at stealing".

If I can have no confidence in the balance sheet, then I cannot arrive at a valuation.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 11, 2016, 12:55:29 PM
This looks pretty fucked up.  I assumed board coup, but then Mack left his prints all over the knife and called into question the cash as well
as whether or not LC has been levering up to buy its own loans.  "Board coup" is now inching closer to "these guys even suck at stealing".

If I can have no confidence in the balance sheet, then I cannot arrive at a valuation.

What do you mean by "board coup"? I hate what happened there, but at least it is the right thing for board to expose the internal investigation result and take serious action. Or maybe you would feel more comfortable if they tried to soften the problem as some analyst would suggest?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: RT45 on May 11, 2016, 01:16:09 PM
Most likely the board has Directors and Officers insurance through LendingClub to protect them personally.

If they deemed Renaud to have done something illegal and ignored it, it could potentially pierce the corporate veil in their duty to represent shareholders, making them personally liable for LendingClub / Renaud's actions and doing nothing about it.

Given the collective resumes of the board, I doubt they want the personal liability of all the note holders on LendingClub.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 11, 2016, 01:37:42 PM
LC just lost an entire state of borrowers.  Down to 48 states, from 49.  Is their grid shutting down?

https://help.lendingclub.com/hc/en-us/articles/214463457-Who-can-borrow-through-Lending-Club-

The falsification of those borrower disclosures is bigger than just "one institutional client abused"...

ETA:  IF BOTH supply AND demand diminish, THEN...
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Ran on May 11, 2016, 02:31:30 PM
How do you call it "just"? you just found this outdated faq page or found the page was just updated? The formal application page still has West Virginia listed. Panic does not help investing
LC just lost an entire state of borrowers.  Down to 48 states, from 49.  Is their grid shutting down?

https://help.lendingclub.com/hc/en-us/articles/214463457-Who-can-borrow-through-Lending-Club-

The falsification of those borrower disclosures is bigger than just "one institutional client abused"...

ETA:  IF BOTH supply AND demand diminish, THEN...
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 11, 2016, 02:37:16 PM
How do you call it "just"? you just found this outdated faq page or found the page was just updated? The formal application page still has West Virginia listed. Panic does not help investing

I stand by my statement.  West Virginia has closed LC for borrowing, effective today.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 11, 2016, 02:46:27 PM
How do you call it "just"? you just found this outdated faq page or found the page was just updated? The formal application page still has West Virginia listed. Panic does not help investing

I stand by my statement.  West Virginia has closed LC for borrowing, effective today.

Do you have news link for that?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 11, 2016, 02:48:27 PM
I imagine that it will be objectively confirmed, shortly.  LC's "Help" FAQ has already been updated to reflect it.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 11, 2016, 04:38:02 PM
LC just lost an entire state of borrowers.  Down to 48 states, from 49.  Is their grid shutting down?
https://help.lendingclub.com/hc/en-us/articles/214463457-Who-can-borrow-through-Lending-Club-

Do you think this is related to the current scandal, or just coincident? 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 11, 2016, 04:38:49 PM
Is Folio back and working ok? How is the volume compared to last week?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Quackhead on May 11, 2016, 05:21:21 PM
Is Folio back and working ok? How is the volume compared to last week?

Seems to be working to me. I just picked up a handful of quality, second-hand notes on Folio (but ran out of available cash). Total available is 440k. IIRC the total available usually sits around 250-300k.
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Ran on May 11, 2016, 05:56:26 PM
Is Folio back and working ok? How is the volume compared to last week?

Seems to be working to me. I just picked up a handful of quality, second-hand notes on Folio (but ran out of available cash). Total available is 440k. IIRC the total available usually sits around 250-300k.
Only 60k of them are serious or motivated listings(>660 FICO, <=0% discount). Wondering what the number was before Monday
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 11, 2016, 06:14:20 PM
PeerCube only tracks number of loans (not number of notes) listed on Folio market. These are number of loans detected at about Noon last two weeks. There is some uptick if you compare day of this week to same day last week. But I doubt this gives you much insight into volume of notes.

Code: [Select]
2016-05-11 - 57,106
2016-05-10 - 56,078
2016-05-09 - 58,569
2016-05-08 - 64,917
2016-05-07 - 60,112
2016-05-06 - 53,056
2016-05-05 - 52,314
2016-05-04 - 53,992
2016-05-03 - 48,560
2016-05-02 - 47,196
2016-05-01 - 60,637
2016-04-30 - 59,909
2016-04-29 - 54,511
2016-04-28 - 55,225

Is Folio back and working ok? How is the volume compared to last week?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 11, 2016, 08:17:26 PM
How do you call it "just"? you just found this outdated faq page or found the page was just updated? The formal application page still has West Virginia listed. Panic does not help investing

I stand by my statement.  West Virginia has closed LC for borrowing, effective today.

Maybe a good thing considering the state of the Coal industry...
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 11, 2016, 08:19:20 PM
That thought crossed my mind.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 11, 2016, 08:25:39 PM
But Hillary's gonna bring green jobs to WV; wait the primary is over; nevermind.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 12, 2016, 12:13:21 AM
Thank you, Anil.

Does not look like anything major has happened on Folio.

Anyone has stats as to how quickly loans are getting funded this week vs last as well as number of available notes?

I wonder if institutions have pulled out.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 12, 2016, 12:49:35 PM
Retail platform seems to have slowed down since Monday, 30+% more total loans available since Monday. Screen capture from https://www.peercube.com/histperf/available_loans/lc

Thank you, Anil.

Does not look like anything major has happened on Folio.

Anyone has stats as to how quickly loans are getting funded this week vs last as well as number of available notes?

I wonder if institutions have pulled out.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 12, 2016, 01:03:21 PM
Stock is down another 6% and alerts of some law firm jumping in to sue already.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Quackhead on May 12, 2016, 04:29:26 PM
Retail platform seems to have slowed down since Monday, 30+% more total loans available since Monday. Screen capture from https://www.peercube.com/histperf/available_loans/lc

Thank you, Anil.

Does not look like anything major has happened on Folio.

Anyone has stats as to how quickly loans are getting funded this week vs last as well as number of available notes?

I wonder if institutions have pulled out.

In my case I have paused buying fresh notes to use my cash for buying seasoned notes on Folio. I wonder how many others are doing the same? That could be part of the reason for the slow down.
Title: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 12, 2016, 05:43:29 PM
Bank alliance suspends purchases. I'm getting increasingly more nervous

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 12, 2016, 05:46:05 PM
Bank alliance suspends purchases. I'm getting increasingly more nervous

Sent from my SAMSUNG-SM-G935A using Tapatalk

How about a URL reference.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 12, 2016, 05:49:46 PM
Rob - link from the other thread:

http://www.wsj.com/articles/community-bank-group-suspends-lendingclub-purchases-1463085445
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 12, 2016, 05:53:22 PM
Bank alliance suspends purchases. I'm getting increasingly more nervous

Sent from my SAMSUNG-SM-G935A using Tapatalk

I saw the news, it's since Monday when RL issue was disclosed.
I'm quite disappointed that lc has no further official information since then - they should keep informing what they gonna do and give investors confidence.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 12, 2016, 05:59:53 PM
Now we follow the dumb money?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: rawraw on May 12, 2016, 06:03:49 PM
Now we follow the dumb money?
Is there a way to block posters on this forum?

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 12, 2016, 06:05:58 PM
Rob - link from the other thread:

http://www.wsj.com/articles/community-bank-group-suspends-lendingclub-purchases-1463085445

Thanks. It's like "Men In Black" when all the aliens were leaving earth.
I've stopped buying notes (not exactly LC's biggest worry), GS & Jefferies aren't doing the securitizations, now this.
I don't have WSJ and can't see the entire article. Did they name any particular banks?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 12, 2016, 06:14:11 PM
WSJ tip, google search the title then go to it from the google results page and they let you in.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 12, 2016, 06:31:14 PM
Bank alliance suspends purchases. I'm getting increasingly more nervous

This is entirely expected.  Therefore it is not "news".  If you were the guy at the bank alliance running the program, you would suspend.  Of course.  You get this call from the compliance department asking whether we have any exposure from the scandal, and you say "We believe we do not, but we have suspended further transactions with them while we study the issue."  What other thing would you feel comfortable saying?

Therefore, this should not make you feel "increasingly more nervous".

Now, this is evidence of how a crisis snowballs!  That's for sure.  The snowball is rolling. 

With all these different investors suspending their investments, LC cannot possibly grow originations this quarter.  Originations will therefore fall Q/Q for the first time 2nd Quarter.

If I were running LC, I would consider trimming the staff right now, in an attempt to avoid several quarters of losses.  There will be no quick recovery, because the timing of the scandal sums it into a perfect storm. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 12, 2016, 06:38:45 PM
If I were an LC employee I'd have been looking for the "next new thing" last Monday.
Yet another problem; particularly in the Bay area where everyone changes jobs at the drop of a hat.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 12, 2016, 06:42:33 PM
Quote
If I were an LC employee I'd have been looking for the "next new thing" last Monday.
Yet another problem; particularly in the Bay area where everyone changes jobs at the drop of a hat.

A lot of the mid to low senior level employees already left after the IPO.

I really think the best play for LC at this point is to get bought out. They're a good target for a bank that wants to the technology, customer list, and marketplace model. LC needs a financial backer that can calm investors' fears and let LC ride out the storm.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 12, 2016, 06:45:19 PM
WSJ tip, google search the title then go to it from the google results page and they let you in.
Thanks; that worked for me.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jennrod12 on May 12, 2016, 06:55:26 PM
Rob - link from the other thread:

http://www.wsj.com/articles/community-bank-group-suspends-lendingclub-purchases-1463085445

Last paragraph:  Alliance Partners has communicated frequently with LendingClub this week and has been providing updates to its members, a person with knowledge of the situation said. Because BankNewport buys loans on the first of each month, the suspension of the BancAlliance program won’t have any practical effect for it until June 1. Executives at the bank said they expect the program will be restored before that point.

It sounds like they expect this to all get sorted out relatively quickly.

Jenn
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 12, 2016, 07:05:24 PM
Therefore, this should not make you feel "increasingly more nervous".

Now, this is evidence of how a crisis snowballs!  That's for sure.  The snowball is rolling. 

Ok, if that's not "new news", and we're kinda talking about "Known Unknowns":

1.  More shit will hit the fan if there are any further surprises in who owns the other ~69% of Cirrix.

2.  Or if there are more Cirrix-like vehicles that were slipped past the board, without any disclosure.

3.  More institutional buyers bail/pause.  (Are you saying we should expect ALL of them to do that?)

4.  How much of LC's lowcost borrower volume was coming in as result of these bank partnerships?

I'm trying to figure out what to expect.  Some of this I expected.  Some of it I didn't fully factor, yet.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 12, 2016, 07:15:18 PM
Rob - link from the other thread:

http://www.wsj.com/articles/community-bank-group-suspends-lendingclub-purchases-1463085445

Last paragraph:  Alliance Partners has communicated frequently with LendingClub this week and has been providing updates to its members, a person with knowledge of the situation said. Because BankNewport buys loans on the first of each month, the suspension of the BancAlliance program won’t have any practical effect for it until June 1. Executives at the bank said they expect the program will be restored before that point.

It sounds like they expect this to all get sorted out relatively quickly.

Jenn

Yeah... except this is cascading out of control:

http://www.bloomberg.com/news/articles/2016-05-12/lendingclub-loan-buyer-bancalliance-considers-pausing-purchases

Now, BancAlliance is backing off even more...  like 1.5 hours after 1st story went out.  Their phones must have rung a lot.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 12, 2016, 07:30:47 PM
...talking about "Known Unknowns":

1.  More shit will hit the fan if there are any further surprises in who owns the other ~69% of Cirrix.
2.  Or if there are more Cirrix-like vehicles that were slipped past the board, without any disclosure.

Those are certainly examples that would enflame the situation.  I will swear under oath that I have zero investment in Cirrix. 

Quote
3.  More institutional buyers bail/pause.  (Are you saying we should expect ALL of them to do that?)

I expect all banks to pause.  I have no idea how long they will pause, or what fraction of those pauses will be essentially permanent.  Some hedge funds will pause.  Some hedge funds were already pausing before the crisis hit.  That's what caused Prosper to have a down quarter, and LC to have a lower-growth-than-expected quarter.

I can't say to what degree the scandal will harm the securitization market that was just getting started.  It could easily go into idle for another couple of years.  There are two levels of trust involved.  The guy who puts together the securitization not only has to be comfortable, but he has to believe that his customers will be comfortable enough to buy the paper he creates. 

Quote
4.  How much of LC's lowcost borrower volume was coming in as result of these bank partnerships?

I'm thinkin' 25% of total volume.

Quote
I'm trying to figure out what to expect.  Some of this I expected.  Some of it I didn't fully factor, yet.

Is difficult.  Could be 25% to 50% down originations next quarter.  That's why I'm calling for an immediate staff reduction.  I would try to cut expenses enough to be profitable or nearly so thru the event.  There are different management approaches to earnings during crisis.  Another approach is to say nobody cares how bad you report during the crisis, but you want good earnings after the crisis -- so write off everything you can in one big bad earnings report.

Hard to say what the response of the retail market will be.  I believe it will be pretty sticky.  Therefore, I don't see how overall originations down more than 50% are possible.

Recovery, if it occurs, will take two years.  If the stock keeps going down, they will be acquired. 

Would be great to be a fly on the wall in the board room. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 12, 2016, 07:37:57 PM
...talking about "Known Unknowns":

1.  More shit will hit the fan if there are any further surprises in who owns the other ~69% of Cirrix.
2.  Or if there are more Cirrix-like vehicles that were slipped past the board, without any disclosure.

Those are certainly examples that would enflame the situation.  I will swear under oath that I have zero investment in Cirrix.

I just noticed that Cirrix backwards is "XIRR IC".  That's cute investment company naming.

At least we know for certain that they were using XIRR to compute their returns, properly.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 12, 2016, 08:22:25 PM
Just thought this might be of interest to a few:
http://www.bloomberg.com/news/articles/2016-05-12/jim-chanos-says-we-were-short-lending-club?cmpid=yhoo.headline (http://www.bloomberg.com/news/articles/2016-05-12/jim-chanos-says-we-were-short-lending-club?cmpid=yhoo.headline)

The whole investing world is short LC. Should be reason enough to fade it, but ... I'm not.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 12, 2016, 08:37:49 PM
Chaos has been wrongon just about everything in recent years so I'm glad he's short. Once Ackman goes short we will know to go long.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 12, 2016, 08:54:44 PM
Chaos has been wrongon just about everything in recent years so I'm glad he's short. Once Ackman goes short we will know to go long.

Like I said, the whole world hates LC stock; probably Ackman too. Usually a great reason to buy it.
I can't, but I'll be sure to go all in at $0.50.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 12, 2016, 09:12:57 PM
Thank you Anil for the chart.

I think LC will be forced to raise interest rates on loans to bring in/compensate investors.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: P2PFact on May 12, 2016, 09:16:38 PM
http://www.businesswire.com/news/home/20160512006238/en/SHAREHOLDER-ALERT-Lundin-Law-PC-Announces-Investigation
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 12, 2016, 09:34:37 PM
http://www.businesswire.com/news/home/20160512006238/en/SHAREHOLDER-ALERT-Lundin-Law-PC-Announces-Investigation

i dont think this was ever disclosed
"The investigation concerns whether the Company violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Specifically, the investigation will focus on the California Department of Business Oversight’s request for details concerning the Company’s lending practices."

Given the recent stock price drop there will be many more lawsuits.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 12, 2016, 09:54:39 PM
Given the recent stock price drop there will be many more lawsuits.

Yes, I'm sure that's right.

However, please note that while people use the shortcut of calling these things "lawsuits", most of them are not suits at all, but instead are merely advertisements from lawyers trying to attract customers who want to sue or participate in a suit.  Whenever a law firm announces an "investigation" that means its an advertisement for plaintiffs.

Lawyers issue these press releases whenever a company's stock falls big or announces any irregularity.  They issue the press releases BEFORE they study the situation or even form an opinion about whether there was wrongdoing.  They do it this way because when the time comes to figure out which law firm gets to run a class action suit, judges have often favored the first to file.  Therefore the first guy who gets some credible plaintiffs signed up and files has a better chance to run the class action suit, if there is one, and that's a lottery ticket to big fees.

So these advertisements from ambulance chasers are not really news.  They're just an anticipated reaction to bad news you've already read.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 12, 2016, 10:06:38 PM
I'm gonna go out on a limb and predict that, this time, they actually catch quite a number of ambulances (ambulii?).
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 12, 2016, 11:11:00 PM
Agree with Fred that the shareholder "lawsuits" are not a real concern. Pretty much any time a stock drops 10+% these fly by night law firms come out of the woodwork trying to garner attention. Almost all of these suits will be dismissed.

The major concern is investor confidence in Lending Club. If I were LC, I would be announcing an investor conference, conference call, management roadshow, SOMETHING to address investor concerns and rebuild confidence. The silent Bob routine isn't going to work. They need to work quickly to rebuild investors' confidence or they're finished.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: andy3109 on May 12, 2016, 11:42:24 PM
Quote
The silent Bob routine isn't going to work. They need to work quickly to rebuild investors' confidence or they're finished.

Agreed. I don't know why they aren't doing/saying anything. Don't they have any mitigation strategies?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: SeanMCA on May 12, 2016, 11:45:08 PM
I assumed that some investor fear would mean that LendingRobot would pick up a ton of notes for me this week and send my cash balance to zero. Instead, there's apparently been no notes that meet my parameters since before they made the announcement. I've managed to pick up none instead.

I usually pick up a few notes per day in $50 increments. It's statistically irrelevant but I just figured that there would be even more opportunities than normal. Guess not.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 01:07:59 AM
If I were LC, I would be announcing an investor conference, conference call, management roadshow, SOMETHING to address investor concerns and rebuild confidence. The silent Bob routine isn't going to work. They need to work quickly to rebuild investors' confidence or they're finished.

I presume there will be a conference call at the time of the release of full Q1 info, ie next week.

Agree sooner is better. 

I've been thinking about the new CEO and what his first three days have been like.  He steps in and one of the first things he's asked to do is sign off the Quarterly report.  Before he can do that, he needs several hours of briefing from outside lawyers on the legal liabilities associated with his signing the damn thing, then he needs probably a day of briefing from accountants on what went into the quarterly report so that he can sign.  Internal auditors and outside auditors are whirring around and surely want some of his time for 20 or so issues.  Board gives them direction, but CEO's gotta talk to them some, because probably 10 of those issues he really needs to understand.  I imagine meetings with big investors (investors in loans, ie banks and hedge funds) where he introduces himself, tries to calm them and find out what they need.  His regulatory people probably want his time to go over their responses to various regulators who are no doubt asking questions, have deadlines, etc.  Meanwhile he needs to sneak in a couple meetings with communications people to set a plan for communicating with about 5 different constituencies.  There are probably 3 kinds of lawyers sitting outside his office waiting to see him, each charging $400/hr while they wait.  I hope he's had a meeting with his CFO and HR person to tell them "You know, we might need a staff reduction.  Go figure out a plan."   He's gotta allocate some time to communicating with employees, to make sure they don't all go nutso.  I don't know what his relationship with the board is.  That's important right now.  If its a good relationship, they will step in and help.  If its more distant they may just request more things from him, making his life even more difficult. 

In spite of a zillion issues flying around and almost no sleep, he's going to have to put a good face on all this in some public meetings or calls or something within a couple of days.

Ya' know, he might not be up to all this.  Few people would be.  We'll find out soon.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 13, 2016, 01:18:31 AM
I'd be looking really askance at that BOD..... I bet we see a delay, anyway.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 13, 2016, 02:27:56 AM
From Form 8-K filed 5/9/2016 http://ir.lendingclub.com/Cache/c34233919.html

Quote
Lending Club will file an extension request with the Securities and Exchange Commission to file its quarterly report on Form 10-Q for the first quarter on or prior to May 16, 2016.

It doesn't seem LC has filed an extension request yet Form 12b-25 unless it is not published on Edgar. Any delay will cause LC to go out of compliance with SEC deadline for filing 10-Q and will really spook the market.

Edit: LC filed the required form 5/10/2016 https://www.sec.gov/Archives/edgar/data/1409970/000140997016002113/a12b-25asfiledon51016.htm

Quote
In light of the timing of the internal board review and change in senior management described above, the Company is not in a position to have the review of the Report and related matters completed, or to provide the management certifications needed to support the review or required to accompany the Report, in the time necessary to permit the filing of the Report by May 10, 2016. The Company plans to file the Report on or prior to May 16, 2016.

https://www.sec.gov/answers/form10q.htm

I'd be looking really askance at that BOD..... I bet we see a delay, anyway.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 03:21:21 AM
I have an observation about LC's stock price.  You're not going to like it.

The price of LC and ONDK have moved together ever since the IPO.  They've both plunged 80something percent, and the shape of the two curves match to an astonishing degree.  Seeing this was quite a shock.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2FCapture-LC-ONDK-stockprice.PNG&hash=2a6eff530c6aabc30aec8d91e2edd85f)

Now keep in mind, these are separate companies, with different management, different products, loaning money to different markets, and with different investors, and yet they move together.

I conclude that most of LC's stock price movement is NOT ABOUT LC AT ALL, but about a change in stock investor sentiment toward the new online lenders as a group.  In a year and a half, stock investor sentiment in this group has gone from unleashed enthusiasm to unbridled disdain.

We've talked about what it will take to restore faith in the business to allow lending banks to reengage, for example, but such things may not affect the stock price if the stock price isn't really a reaction to LC, but to much broader things.

In other words, the business could recover, get those buyers back, stay profitable, and the stock price could stay low or go lower.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: sommers on May 13, 2016, 11:10:07 AM
A lot of uncertainty regarding new Federal regulation of the non bank lending business.  Plus the proliferation of competing online lenders.  Believe that competition should impact interest rate revenue (drive them lower) which will adversely effect investor returns and interest (people like me).
I turned off my auto investing in early March based on these concerns and plan to just let my loans run out over the next 3 years (mine are all 3 year terms)
I will then re assess but doubt I'll re enter this
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Emmanuel on May 13, 2016, 12:29:46 PM
I conclude that most of LC's stock price movement is NOT ABOUT LC AT ALL, but about a change in stock investor sentiment toward the new online lenders as a group.  In a year and a half, stock investor sentiment in this group has gone from unleashed enthusiasm to unbridled disdain.

Agreed. An anecdotical evidence of this is LC loosing 10% last week after On Deck announced disappointing results, while a) it's small-business vs personal loans, b) on-balance vs marketplace, c) LC was expected to show good financial numbers the week after (which they did, by the way).
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: sommers on May 13, 2016, 01:09:59 PM
read today's WSJ---It is featured on front page of section B
200 community banks have pulled the plug on buying their loans.  I am starting to worry about the viability of LC and most importantly of my remaining loan portfolio.
Never been in this spot before (obviously).
This La --who ever guy---really turned out to be a criminal.  Hopefully he'll do some time and be stripped of everything.  Wonder if the other online lender players are sniffing around the LC corpse yet

Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 13, 2016, 01:21:33 PM
Interesting article in NY Times:
Lending Club, a Story Stock That Skimped on the Details
http://www.nytimes.com/2016/05/15/business/lending-club-a-story-stock-that-skimped-on-the-details.html

Bad news keep coming out in bits-and-pieces.

Quote
Here’s a hypothesis: Investors don’t have enough information about the company’s operations to keep them confident about its prospects. When shareholders have to rely more on a company’s promise than on the reality of its operations, they often flee at the first sign of trouble.

In contrast with traditional financial companies, Lending Club’s disclosures are thin. And the company’s practices in the area were the subject of a whistle-blower submission to the Securities and Exchange Commission last July. The submission, which I reviewed, contended that the company does not disclose crucial operational measures that investors need to evaluate its business.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: fliphusker on May 13, 2016, 01:51:51 PM
Interesting article in NY Times:
Lending Club, a Story Stock That Skimped on the Details
http://www.nytimes.com/2016/05/15/business/lending-club-a-story-stock-that-skimped-on-the-details.html

Bad news keep coming out in bits-and-pieces.

Quote
Here’s a hypothesis: Investors don’t have enough information about the company’s operations to keep them confident about its prospects. When shareholders have to rely more on a company’s promise than on the reality of its operations, they often flee at the first sign of trouble.

In contrast with traditional financial companies, Lending Club’s disclosures are thin. And the company’s practices in the area were the subject of a whistle-blower submission to the Securities and Exchange Commission last July. The submission, which I reviewed, contended that the company does not disclose crucial operational measures that investors need to evaluate its business.
"Lacking, for example, is detailed data on Lending Club’s credit decisions and scoring models, its investors’ returns and loan performance. "
I am not a well versed in most of these things, but this makes little sense to me.  So people want to know exactly how LC scores their loans for investors in LC?  People who invest in Coke do not get to know what the secret recipe is. 

"In its filings, the company does show two tables of charge-off rates on its loans, reflecting borrower defaults. One table spans three years, the other, five. Good luck figuring them out."-LOL, what?  His degree in business, journalism or online degree from Madagascar?

"But this chart, which the company noted was “for informational purposes only,” was limited to larger investors, those buying at least 100 of the company’s notes or bundled loans."-Sweet, I am now a large investor.  Guess he ignores drop down boxes.

"Since the company is a peer-to-peer lender, the performance on smaller loan purchases would be a more helpful measure."-These charts illustrate how diversification-spreading an investment equally across hundreds or even thousands of Notes-can drive more solid returns. Lending Club investors with more diversified accounts have generally experienced less volatility and more solid returns than investors with more concentrated holdings. Diversification increases when you purchase additional Notes related to different borrower loans.   The author is flaunting his own agenda in the article, and ignoring items that are clearly in front of him. 

"The investor lesson here is also clear: Don’t let enthusiasm for a purportedly innovative business model replace hard-nosed analysis of a company’s operations. And if the data to do that analysis isn’t there, move on."  This could be replaced with, "Bad journalists write bias and pass it off as fact."  Writers like this piss me off due to steering readers in the direction they want them to be steered in. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 02:04:48 PM
I tweeted author of the NY Times article.  Explained to her that "100 notes" is not a "larger investor", and also asked how she got access to that SEC whistleblower document.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 13, 2016, 02:10:04 PM
Sorry if this reflects a bias that I have regarding the nyt, but this paper loves to report on anything that remotely smells of financial misdeeds, whether real or imagined.  I call them the financial paper that hates finance.  Sometimes they do break some good stories but their obvious bias against the financial services industry as whole (funny when you realize that the financial industry is what generates the tax revenue to keep nyc thriving) makes me wonder if their financial reporting is objective at all.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: fliphusker on May 13, 2016, 02:41:38 PM
I tweeted author of the NY Times article.  Explained to her that "100 notes" is not a "larger investor", and also asked how she got access to that SEC whistleblower document.

"In its first-quarter presentation, the company said that 56 percent of its loan originations were financed by institutions, with the remainder funded by individuals.

But in its most recent annual report, issued in February, Lending Club noted that “a relatively small number of investors account for a large dollar amount of investment in loans funded through our marketplace.”"

I looked through Feb annual report, and did not see the last quote.  I did not put it in the other post, as figured it was there, but was not finding it.  I also figure she is just misleading here on not saying that a large amount of loans for institutions buy up the large amount of the 56%, not the total sold by LC to ALL. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 13, 2016, 02:48:35 PM
I'd be asking regulators to step in and secure the public's notes that are sitting, exposed on LC's balance sheet, not arguing w/journalists.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 02:49:39 PM
The quote is from the risks section of the 10K.  After you pull the 10K into your web browser, use the browser's text search feature to search for "relatively small" and you will find it immediately.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 04:51:50 PM
LC stock closed today at $3.51 !

I called my contact at LC, and told him to send a message up to Scott Sanborn suggesting that he must communicate promptly. 

This is not a normal situation, so normal rules don't apply.  Investors need to get status information to counter the onslaught of negative press.  Bogus information in today's NY Times article, for example, must be countered immediately.  Bogus information in the press snowballs.  It gets copied into blogs, which get quoted in another article, etc.  We're in a snowball.

I told him that the trend over the past couple of years was for LC to disclose less and less.  RL often cited competitive reasons for reducing disclosure.  For example this was the story when historical data downshifted to quarterly release.  I told him there are no competitive pressures now.  The pressure now is trust.  To regain trust, LC should immediately become much more open.  For example, issuing monthly origination figures would help a lot I think.  I know the securities lawyers will no doubt recommend against it, preferring that one only disclose things already in the 10Q etc.  However, retail stores report monthly same-store sales.  Such reporting is common for public companies.  Common or not, LC needs continuous disclosure like this in order to regain trust of investors, which is critical for survival.

Sanborn probably won't see the message, but I tried.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 13, 2016, 05:02:12 PM
Props for trying.  I feel like at my account size I'd just be laughed at and told to have a nice day.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 05:08:22 PM
Props for trying.  I feel like at my account size I'd just be laughed at and told to have a nice day.

Well the guy I talked with didn't laugh at me, but the next guy up the chain probably will.  ;D

Another option is to call investor relations.  (The folks who talk with stock investors.)  I've never talked with LC's IR folks, but I have talked with many IR folks at other companies.  Anybody at all can call IR folks, and they are usually very polite and receptive.  For one thing, they have no idea in hell how much stock you own, so unless you tell them, they have to presume it might be a lot.  I first read this explanation in Peter Lynch's book many years ago, and I found it to be true.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 13, 2016, 05:13:10 PM
Since the topic of who is saying what has come up, I've been surprised how quiet lendacademy.com blog has been.  I would think there would be post(s) summarizing all the actual facts and tracking things.  At the same time everything he does is based on LC and the industry as a whole being seen in a good light so maybe there is a bit of a conflict there.  Especially with the announcement of another LendIt conference.  I just find it curious that the last post about it all was on 5/9.  You know this and his blog site has to be getting 10 fold traffic at least with all this going on. 

Edit: Not trying to call him out or anything, just an observation.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: SeanMCA on May 13, 2016, 05:18:09 PM
My LendingRobot LC filters have picked up zero notes since the news was announced on Monday morning. It's statistically meaningless, but I don't know if I've ever gone this long without a single note pickup and I can't help but consider the coincidence of the timing for this drought to happen. The irrational part of my mind can't help but get swept up in the paranoia.

I'm assuming Lending Club hasn't said a peep to platform investors like us because there is now an SEC investigation and we are ultimately buyers of securities they issue. Still, the silence is so ominous especially with zero note pickups this week for me.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 13, 2016, 05:39:05 PM
Peter is industry cheerleader. He is most probably as shocked as anyone else, I know, who has been engaged in any significant capacity in the industry. Anyway, he already penned two posts on the issue this week. I am not sure what else he could say. Everyone, I know, is holding their breath for next week 10-Q filing and what LC management will have to say.

More Thoughts on the Lending Club News Plus a Review of Their Q1 Results
http://www.lendacademy.com/lending-club-earnings-results-q1-2016/

Lending Club Founder Renaud Laplanche has Resigned as CEO
http://www.lendacademy.com/lending-club-founder-renaud-laplanche-resigned-ceo/

Since the topic of who is saying what has come up, I've been surprised how quiet lendacademy.com blog has been.  I would think there would be post(s) summarizing all the actual facts and tracking things.  At the same time everything he does is based on LC and the industry as a whole being seen in a good light so maybe there is a bit of a conflict there.  Especially with the announcement of another LendIt conference.  I just find it curious that the last post about it all was on 5/9.  You know this and his blog site has to be getting 10 fold traffic at least with all this going on. 

Edit: Not trying to call him out or anything, just an observation.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 13, 2016, 06:32:16 PM
I conclude that most of LC's stock price movement is NOT ABOUT LC AT ALL, but about a change in stock investor sentiment toward the new online lenders as a group.  In a year and a half, stock investor sentiment in this group has gone from unleashed enthusiasm to unbridled disdain.

Agreed. An anecdotical evidence of this is LC loosing 10% last week after On Deck announced disappointing results, while a) it's small-business vs personal loans, b) on-balance vs marketplace, c) LC was expected to show good financial numbers the week after (which they did, by the way).

Until Monday, I'm agreed, then not so much. Hey, I may even be a plaintiff in a class action suit. I bought LC stock a week ago Thursday when it went down apparently in reaction to On Deck's bad quarter (and thinking is LC different for all the reasons you stated). Being optimistic regarding LC's prospects this quarter it seemed an opportunity. My thought was that LC would have a good quarter and I was looking forward to the conference call Monday PM. Well, that was, as they say, OBE (overtaken by events). Awakened Monday AM to the news about RL's departure and the stock at around $5.50 in pre-market. Never thought twice and blew out my position at $5.38 within the first hour of trading. My entry was at $7.14 so I lost about 25% of my investment on the "event" (to put it kindly). In dollar terms my loss was not an insignificant amount.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 13, 2016, 06:46:31 PM
I'd be asking regulators to step in and secure the public's notes that are sitting, exposed on LC's balance sheet, not arguing w/journalists.

I'll second that!! I was NOT an accredited LC investor. I'm John Q. Public and merit protection from myself.
Some of the things I've thought of that LC could do regarding my (our) notes are very scary, but perfectly legal as far as I know.
Don't want to even post them but I would sell my portfolio at par to any and all takers and be thankful.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 13, 2016, 06:54:19 PM
LC stock closed today at $3.51 !

I called my contact at LC, and told him to send a message up to Scott Sanborn suggesting that he must communicate promptly. 

This is not a normal situation, so normal rules don't apply.  Investors need to get status information to counter the onslaught of negative press.  Bogus information in today's NY Times article, for example, must be countered immediately.  Bogus information in the press snowballs.  It gets copied into blogs, which get quoted in another article, etc.  We're in a snowball.

I told him that the trend over the past couple of years was for LC to disclose less and less.  RL often cited competitive reasons for reducing disclosure.  For example this was the story when historical data downshifted to quarterly release.  I told him there are no competitive pressures now.  The pressure now is trust.  To regain trust, LC should immediately become much more open.  For example, issuing monthly origination figures would help a lot I think.  I know the securities lawyers will no doubt recommend against it, preferring that one only disclose things already in the 10Q etc.  However, retail stores report monthly same-store sales.  Such reporting is common for public companies.  Common or not, LC needs continuous disclosure like this in order to regain trust of investors, which is critical for survival.


Sanborn probably won't see the message, but I tried.

+1
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Emmanuel on May 13, 2016, 07:14:55 PM
The 2 best pieces of the NY Times http://www.nytimes.com/2016/05/15/business/lending-club-a-story-stock-that-skimped-on-the-details.html?_r=0 (http://www.nytimes.com/2016/05/15/business/lending-club-a-story-stock-that-skimped-on-the-details.html?_r=0) :

"Lending Club provides scant details on borrower performance by type, product or vintage (the year in which a loan was made)"

and, my preferred: "A chart on the company’s website showing the “adjusted net annualized return” [...] was limited to larger investors, those buying at least 100 of the company’s notes".

It's great to see journalists really understanding peer lending  ;)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 07:35:22 PM
I have sent tweets to the NY Times author, explaining some of her misstatements.  She probably doesn't care.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 13, 2016, 07:39:18 PM
I'd be asking regulators to step in and secure the public's notes that are sitting, exposed on LC's balance sheet, not arguing w/journalists.

Oh man.  No no no.  These notes went thru full SEC disclosure.  Now you want someone (would have to be SEC I would think) to come in and change the rules after the notes issued? 

If SEC did so, it might well destroy the whole industry.  No more direct investment for you.  Now you go thru Citibank or Goldman and get charged high fees.   Or... what is it that the new Goldman Sachs bank pays on those internet savings accounts?  1.05%/year.  Yea, that's the ticket.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 13, 2016, 07:50:22 PM
I'd be asking regulators to step in and secure the public's notes that are sitting, exposed on LC's balance sheet, not arguing w/journalists.

Oh man.  No no no.  These notes went thru full SEC disclosure.  Now you want someone (would have to be SEC I would think) to come in and change the rules after the notes issued? 

If SEC did so, it might well destroy the whole industry.  No more direct investment for you.  Now you go thru Citibank or Goldman and get charged high fees.   Or... what is it that the new Goldman Sachs bank pays on those internet savings accounts?  1.05%/year.  Yea, that's the ticket.

Seems the industry has done a pretty good job of destroying itself.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 13, 2016, 08:01:21 PM
It's great to see journalists really understanding peer lending  ;)

Oh wait for it; sarcasm. I get it. According to IBM's ad's Watson doesn't.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 13, 2016, 08:05:35 PM
I'd be asking regulators to step in and secure the public's notes that are sitting, exposed on LC's balance sheet, not arguing w/journalists.

Oh man.  No no no.  These notes went thru full SEC disclosure.  Now you want someone (would have to be SEC I would think) to come in and change the rules after the notes issued? 

If SEC did so, it might well destroy the whole industry.  No more direct investment for you.  Now you go thru Citibank or Goldman and get charged high fees.   Or... what is it that the new Goldman Sachs bank pays on those internet savings accounts?  1.05%/year.  Yea, that's the ticket.

I don't own any LC notes.  I posted that with the hope that retail investors who do might get protected.  I'll mind my own business.

You might want to begin questioning your apparent assumption that you're dealing with honest people.
(Me?  I walk around with a lamp in the daytime, searching for an honest man.  Sleep in a little bath-tub.)

(...in the marketplace.)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lascott on May 13, 2016, 11:06:19 PM
Since the topic of who is saying what has come up, I've been surprised how quiet lendacademy.com blog has been.  I would think there would be post(s) summarizing all the actual facts and tracking things.  At the same time everything he does is based on LC and the industry as a whole being seen in a good light so maybe there is a bit of a conflict there.  Especially with the announcement of another LendIt conference.  I just find it curious that the last post about it all was on 5/9.  You know this and his blog site has to be getting 10 fold traffic at least with all this going on. 

Edit: Not trying to call him out or anything, just an observation.
Same with NSR Invest -- https://www.nsrinvest.com/about/ -- No Bo, No Jason ...
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: SeanMCA on May 13, 2016, 11:37:04 PM
Same with NSR Invest -- https://www.nsrinvest.com/about/ -- No Bo, No Jason ...

Don't they run a fund that manages investments for people in LC? Would explain why they can't or don't want to talk freely about things right now until they know more.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 14, 2016, 08:06:11 AM
LC stock closed today at $3.51 !

I called my contact at LC, and told him to send a message up to Scott Sanborn suggesting that he must communicate promptly. 

This is not a normal situation, so normal rules don't apply.  Investors need to get status information to counter the onslaught of negative press.  Bogus information in today's NY Times article, for example, must be countered immediately.  Bogus information in the press snowballs.  It gets copied into blogs, which get quoted in another article, etc.  We're in a snowball.

I told him that the trend over the past couple of years was for LC to disclose less and less.  RL often cited competitive reasons for reducing disclosure.  For example this was the story when historical data downshifted to quarterly release.  I told him there are no competitive pressures now.  The pressure now is trust.  To regain trust, LC should immediately become much more open.  For example, issuing monthly origination figures would help a lot I think.  I know the securities lawyers will no doubt recommend against it, preferring that one only disclose things already in the 10Q etc.  However, retail stores report monthly same-store sales.  Such reporting is common for public companies.  Common or not, LC needs continuous disclosure like this in order to regain trust of investors, which is critical for survival.

Sanborn probably won't see the message, but I tried.

I have the same feeling, Fred. Sanborn should stand out, take interviews, and explain to the public what's his ideas about all the questions. I am really disappointed about his silence these days, which may prove he is not qualified for a CEO and PPL should just jump the ship.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lascott on May 14, 2016, 11:11:46 AM
Same with NSR Invest -- https://www.nsrinvest.com/about/ -- No Bo, No Jason ...
Don't they run a fund that manages investments for people in LC? Would explain why they can't or don't want to talk freely about things right now until they know more.
"...for people in LC?"  They have nothing to do with LC except to buy their notes. No LC connections from anything I know of from past interactions or reading. https://www.nsrinvest.com/about/

I thought you were an expert in all things P2P and banking?  http://debanked.com/about-us/ <grin>
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: SeanMCA on May 14, 2016, 01:20:49 PM
Same with NSR Invest -- https://www.nsrinvest.com/about/ -- No Bo, No Jason ...
Don't they run a fund that manages investments for people in LC? Would explain why they can't or don't want to talk freely about things right now until they know more.
"...for people in LC?"  They have nothing to do with LC except to buy their notes. No LC connections from anything I know of from past interactions or reading. https://www.nsrinvest.com/about/

That's what I meant. They buy their notes, not that they were directly connected to LC.

I wouldn't consider myself an expert in "all things" P2P and banking. There is so much to know and I am forever a student of it all. This forum has been very helpful over the years.





Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 14, 2016, 04:49:40 PM
...Sanborn should stand out, take interviews, and explain to the public what's his ideas about all the questions. I am really disappointed about his silence these days, which may prove he is not qualified for a CEO and PPL should just jump the ship.

You may be precisely correct.  However, there is another possibility.

It may be that the issues he's dealing with are far more difficult than you and I know.  Scary possibility.  I don't want to think too hard about this.  I'm not good at inventing thriller story plots anyway.

Its difficult to wait for more facts.  The voyeur in us wants to run at internet speed, but we have no input.  Its like closing your eyes and looking at the colors. 

There are some clues to possible extreme difficulties...
1. No statements since the 5/9 8k filing.  That said they would extend the 10Q filing to 5/16, which is Monday.
2. 5/10 filing NT 10Q officially said delayed 10Q to 5/16.  Ok, that's consistent, and yet...
3. I would expect a conference call to go with the 10Q release, but no call has been scheduled. 

It is still possible that they could announce the call Monday morning, and do the call in the afternoon.


Wild Speculation: Another possibility is that they haven't scheduled a call because they are not yet certain that they can actually publish the 10Q on Monday.  Some difficult undisclosed problem is yet to be solved.


Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: jheizer on May 14, 2016, 05:00:13 PM
I don't know all the times when you are not allowed to announce things and such.  Is it possible we are stuck in one of those because of the delayed release?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 14, 2016, 05:30:52 PM
...Sanborn should stand out, take interviews, and explain to the public what's his ideas about all the questions. I am really disappointed about his silence these days, which may prove he is not qualified for a CEO and PPL should just jump the ship.

You may be precisely correct.  However, there is another possibility.

Yeah, that that's the hottest pen ever handed to a CEO by smiling, kindly, Old Wall Street guys - and Sanborn is too smart to touch it?

I got the impression that he was sincere when he was talking about "values" at LendIt;  I'm not sure that he sells out those "values".

On the up side, that would imply - at least to me - that if he's sticking around, things may be bad, now - but at least on the up and up.

Of course, he was fooled before.  So, maybe now is not the time to have faith in people but, rather, to have faith in "full transparency".

It could be taking a while to settle on the definition of "full" (or to explain the concept of "transparency", given those board members!).

-Diogenes
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: RT45 on May 14, 2016, 05:57:49 PM
Anyone have thoughts on recent insider filings?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 14, 2016, 06:10:57 PM
Anyone have thoughts on recent insider filings?

Yes... So far, based on the Form 4's, they have the CFO, CTO, and CCO.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 14, 2016, 06:25:41 PM
Anyone have thoughts on recent insider filings?

I don't see anything unusual.  Form 4's are hard to follow, as you have to read the footnotes and look at the transaction code letters very carefully.  I know this because once upon a time I had to file these things, and people misinterpreted mine most of the time.

RL's resignation has triggered an accelerated expiration of his options, which is very common.  They're now expiring on 8/4/16 and 8/6/16.

I see he has some at a strike price of $9.56 .  Those will likely almost surely worthless.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 14, 2016, 10:26:30 PM
This is rich. Nothing that the company has said or done warrants concern about bankruptcy or imminent collapse and people want the CEO to come out on TV and say say as much?  Why on earth would the company do this?  As someone already said, the stock is going down in concert with Ondeck, so the sell off is being driven by speculators shorting the industry, most likely.

Put it this way, nothing the company says right now will soothe a few hysterical investors who have very active imaginations (you know who you are).  My advise to LC, better to keep calm and carry on the business of running the company and wait until the fear subsides on its own.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 15, 2016, 02:47:22 AM
Earlier in this thread I made a point about the fact that LC had not scheduled a conference call to go with the 5/16/16 filing of the 10Q. 

I went back and reread the transcript of the 5/9/16 call, and I've decided that it was a pretty complete earnings discussion, so it seems likely that no further earnings call is required.  When I listened to the call the 1st time, my mind was so focused on one particular issue that I didn't remember half of what they said.  Missing of course was discussion of projections or trends, but that's understandable given the expected business perturbations.

Meanwhile, I know that many of you are concerned about what might appear in the 5/16 10Q filing, or whether past financials might be restated, but my latest theory is that it will be boring.  I base this on something that Scott Sanborn said in the 5/9 call:
Quote
We currently do not believe that any of these circumstances individually or in the aggregate have any impact on our reported financial results.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 15, 2016, 10:01:19 AM
... so the sell off is being driven by speculators shorting the industry, most likely.

Before last week the average daily volume for LC was 6M and change. Last week (M - F) the daily volumes were 95.79M, 92.96M, 52.74M, 49.34M and 44.95M). A total of 335.78M LC shares traded; LC has only 381.38M shares outstanding. So 88% of all outstanding LC shares changed hands (or passed through many hands) last week. It was not simply the shorts being naughty. They held perhaps 70M shares (April 29 last date known). Doubtful short interest is 0 shares today. To state what may only be obvious to me, there was a fair amount of long stock, mostly held by institutions, that headed for the exits and took whatever it could get. Their selling may or may not be finished. We'll only know when the stock stabilizes and volatility drops.

BTW: If you take a look at LC's stock trading on Friday 5/6 (before bombshell Monday) it appeared to be to be very strong. The post-On Deck post-Prosper drops had occurred. The stock was washed out and there were just no sellers that Friday. LC stock climbed pretty steadily all day. LC kept their secret very well because from Friday's stock trading pattern no one had a clue what the following Monday had in store.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: hzhou9 on May 15, 2016, 10:46:03 AM
This is rich. Nothing that the company has said or done warrants concern about bankruptcy or imminent collapse and people want the CEO to come out on TV and say say as much?  Why on earth would the company do this?  As someone already said, the stock is going down in concert with Ondeck, so the sell off is being driven by speculators shorting the industry, most likely.

Put it this way, nothing the company says right now will soothe a few hysterical investors who have very active imaginations (you know who you are).  My advise to LC, better to keep calm and carry on the business of running the company and wait until the fear subsides on its own.

1. All investors are sensitive and have active imaginations
2. The key of LC business is trust and fear will snowball - 'wait' will just kill the company
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Ribald on May 15, 2016, 11:23:05 AM
I would rather they take their time and develop a reasoned defensible response than come out too soon with some half baked platitudes.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lascott on May 15, 2016, 12:24:54 PM
Anyone have thoughts on recent insider filings?

I don't see anything unusual.  Form 4's are hard to follow, as you have to read the footnotes and look at the transaction code letters very carefully.  I know this because once upon a time I had to file these things, and people misinterpreted mine most of the time.

RL's resignation has triggered an accelerated expiration of his options, which is very common.  They're now expiring on 8/4/16 and 8/6/16.

I see he has some at a strike price of $9.56 .  Those will likely almost surely worthless.
Site with insidertrading info: http://insidertrading.org/index.php?sort_by=transaction_date&asc=&symbol=lc&date_from=2015-04-07&date_to=2016-05-13&submit=+GO+
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 15, 2016, 02:04:19 PM

1. All investors are sensitive and have active imaginations
2. The key of LC business is trust and fear will snowball - 'wait' will just kill the company

Not all investors are panicking.  Maybe you are, but based on the various surveys and polls done here, the silent majority of forum participants are rather sanguine about bankruptcy potential and expected note returns. A few very visible media outlets and forum writers who are generally uninformed and looking to sensationalize current events are making a lot of noise.  The vast majority of market participants are calmly waiting to see this thing play out.

The key to LC business is confidence in the underwriting models and investor appetite for this kind of consumer credit risk.  A bunch of day traders short selling the stock is no reason for worry at this point.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: lender90530 on May 15, 2016, 05:21:05 PM
I have an appetite for consumer credit risk. What I don't have an appetite for is equity risk in LC, which is exactly what you get when you invest in LC notes without a BRV. When you purchase LC notes, you are basically purchasing the equivalent of a LC junk bond whose returns are tied to the notes that you selected. You are at the mercy of business decisions that LC makes to maximize shareholder wealth. They can expend cash to buy back their stock (which they have already done and have authorized themselves to do more of), they can incur debt to make acquisitions, etc.. As far as I know, unlike bondholders, noteholders don't have any protective covenants to restrict LC's behavior to protect their interests. If I were interested in investing in junk bonds, I would do so only through a well diversified portfolio of them like the HYG ETF has. Institutional investors are not stupid; that's why they demand LC protects them through a BRV.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: LonghornSF on May 15, 2016, 08:54:50 PM
I have an appetite for consumer credit risk. What I don't have an appetite for is equity risk in LC, which is exactly what you get when you invest in LC notes without a BRV. When you purchase LC notes, you are basically purchasing the equivalent of a LC junk bond whose returns are tied to the notes that you selected. You are at the mercy of business decisions that LC makes to maximize shareholder wealth. They can expend cash to buy back their stock (which they have already done and have authorized themselves to do more of), they can incur debt to make acquisitions, etc.. As far as I know, unlike bondholders, noteholders don't have any protective covenants to restrict LC's behavior to protect their interests. If I were interested in investing in junk bonds, I would do so only through a well diversified portfolio of them like the HYG ETF has. Institutional investors are not stupid; that's why they demand LC protects them through a BRV.

Agree with your sentiment. The only thing that gives me peace of mind is that Lending Club is still sitting on a huge net cash balance. Even assuming revenue goes to ZERO, which would never happen, they could survive for at least another year on their cash balance.

I still can't get over how ridiculous this whole affair is. RL must be either the stupidest or greediest man alive to throw away the whole company like this. The board has also greatly mishandled the situation. I had a lot of reservations about LC but to see this happen is an absolute shame.  :-\
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 15, 2016, 10:03:22 PM
Another interesting article about the factors that may lead to demise of Lending Club.

Will LendingClub Survive as a MarketPlace Lender?
https://www.linkedin.com/pulse/lendingclub-survive-marketplace-lender-mark-wilcox
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: TheReaper on May 16, 2016, 05:56:01 AM
This whole affair to date, has been a classic case of the silence being deafening. I would suspect Sanborn and the board know this, and will make some sort of announcement this week.  Not to do so, would be downright moronic.  They need to say something....anything.  I can understand their silence last week, but it can't go on for much longer........
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 16, 2016, 10:32:04 AM

Agree with your sentiment. The only thing that gives me peace of mind is that Lending Club is still sitting on a huge net cash balance. Even assuming revenue goes to ZERO, which would never happen, they could survive for at least another year on their cash balance.

I still can't get over how ridiculous this whole affair is. RL must be either the stupidest or greediest man alive to throw away the whole company like this. The board has also greatly mishandled the situation. I had a lot of reservations about LC but to see this happen is an absolute shame.  :-\

My take is that RL had fun creating the company but would rather sail and enjoy his vast amounts of personal wealth than deal with the day to day operations of the company and a BoD breathing down his back.  Can't say I blame him. The mistake he made was not leaving earlier just before the IPO when he was sitting at the top of the P2P world.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 16, 2016, 10:38:53 AM
I still can't get over how ridiculous this whole affair is. RL must be either the stupidest or greediest man alive to throw away the whole company like this. The board has also greatly mishandled the situation. I had a lot of reservations about LC but to see this happen is an absolute shame.  :-\

My take is that RL had fun creating the company but would rather sail and enjoy his vast amounts of personal wealth than deal with the day to day operations of the company and a BoD breathing down his back.  Can't say I blame him. The mistake he made was not leaving earlier just before the IPO when he was sitting at the top of the P2P world.

If I'm paranoid for running through a full suite of possible conflict/fraud/self-dealing scenarios due to the weak controls that've been exposed, you're now - with the "he just wanted to retire and enjoy going sailing" bit - whatever the opposite of "paranoid" may be.  My paranoia at least yields the fruit of exposing dark areas which will need examination and more disclosure;  not sure what you're accomplishing.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 16, 2016, 01:13:18 PM
If I'm paranoid for running through a full suite of possible conflict/fraud/self-dealing scenarios due to the weak controls that've been exposed, you're now - with the "he just wanted to retire and enjoy going sailing" bit - whatever the opposite of "paranoid" may be.  My paranoia at least yields the fruit of exposing dark areas which will need examination and more disclosure;  not sure what you're accomplishing.

I'm trying to rationalize the news in the best way that I can and not succumb to panic and hysteria. A more thorough review of recent events may come to pass, or this whole thing may blow over in a quarter or two.  Based on what I've seen thus far, I'm betting on the latter.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: BruiserB on May 16, 2016, 01:37:58 PM
Should we be worried that we haven't seen the promised 10Q yet?  Or is that something that would most likely be released after market close in any case?  Hopefully it will come out as promised and then management will start opening up with some updates on what they know.  I'm still sitting on my IPO LC shares and figure they will never be worth what I paid....I just hope things don't get any worse.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Boatguy on May 16, 2016, 06:33:44 PM
It would take us 3-5yrs to fully unwind our positions in LC so patience seems warranted.  I've been investing and buying loans in LC for 8yrs so I'm past worrying that it's a Ponzi scheme.

They have a lot of cash on hand which means they can lose money for quite awhile.  In fact if I was Sanborn, I'd tell the investors he's building for the future and to expect losses for the next two years; the Amazon approach.  Sanborn has a very rich and unique opportunity here to do things the RL perhaps was incapable of doing.  He's been handed a well funded "turn around" which is not usually the case.

LC can return to the original pitch and build the retail investor base with new products and new approaches.  Profits won't be as rich, but they wont' be living at the whim of institutional investors.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: bobeubanks on May 16, 2016, 06:41:45 PM

My take is that RL had fun creating the company but would rather sail and enjoy his vast amounts of personal wealth than deal

So instead of quitting to sail, he went through the trouble to commit fraud and get fired? What a genius he must be.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: mchu168 on May 16, 2016, 06:48:50 PM
So instead of quitting to sail, he went through the trouble to commit fraud and get fired? What a genius he must be.

Bingo and good riddance to him.  After reading through the 10Q, it's clear that RL was running a loose ship.  This mess is going to take a bit longer to clean up...
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Fred93 on May 17, 2016, 03:38:47 AM
Nice Bloomberg article.  WSJ & Bloomberg reporters are good at finding employees who will talk.
http://www.bloomberg.com/news/articles/2016-05-17/inside-lendingclub-s-shakeup-ceo-s-exit-said-to-hang-on-trust

Quote
But tensions simmered inside LendingClub in recent months as turbulence in capital markets prompted investors to pull back from buying Internet loans, according to a person familiar with the matter. As funding got tighter, Laplanche pushed for a strategy that would maintain growth, this person said. Other managers including now-acting CEO Scott Sanborn argued that the company should consider the potential impact on profit from concessions it was offering investors, the person said.

Concessions?  I didn't get any concessions.  Guess I gotta change my middle name to "Bank".

The 10Q does say
Quote
We are actively exploring ways to restore investor confidence in our platform and obtain additional investment capital for the platform loans. These efforts may take a number of different structures and terms; including equity or debt transactions, alternative fee arrangements or other inducements including equity.

An "alternative fee arrangement" might be a "concession".  Maybe they lowered somebody's fee?  But this is all future tense.  Maybe the article meant that RL pushed  for concessions, but they hadn't actually done any yet?

Hey, long time customer here.  You could reduce my fee.  I would accept that.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: twigster on May 17, 2016, 09:21:10 AM
Quote
Concessions?  I didn't get any concessions.
Maybe they are talking about the $2,000 bonus for new IRA investments..... I remember at the time thinking that was sounding a bit desperate.... before all this blew up!    ::)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 17, 2016, 01:54:25 PM
Company is considering new ways to draw funding for its loans

Investors who “contributed a significant amount of funding” for loans have paused purchases to examine their performance “or are otherwise reluctant to invest,” San Francisco-based LendingClub said, adding that the retreat is hurting its ability to field new loan applications.

Higher interest rates might be needed to bring back investors, “which may serve to erode the company’s margins in the near term but may be necessary to get the company back on track,” BTIG analysts including Mark Palmer and Giuliano Bologna wrote in a note to clients. Management has to re-instill confidence in LendingClub’s platform “while the company contends with a legal overhang,” they wrote.

Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million of restricted stock units and her salary was increased to $400,000. Both executives also received $500,000 cash awards that will pay out in a year.

LendingClub’s troubles are affecting competitors. Prosper Marketplace Inc., its largest rival, has met with investors including Fortress Investment Group about potential capital injections, a person with knowledge of the matter said.

MORE here
http://www.bloomberg.com/news/articles/2016-05-17/lendingclub-shares-fall-after-investors-suspend-debt-purchases?cmpid=yhoo.headline
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: BruiserB on May 17, 2016, 02:05:57 PM
Company is considering new ways to draw funding for its loans

Investors who “contributed a significant amount of funding” for loans have paused purchases to examine their performance “or are otherwise reluctant to invest,” San Francisco-based LendingClub said, adding that the retreat is hurting its ability to field new loan applications.

Higher interest rates might be needed to bring back investors, “which may serve to erode the company’s margins in the near term but may be necessary to get the company back on track,” BTIG analysts including Mark Palmer and Giuliano Bologna wrote in a note to clients. Management has to re-instill confidence in LendingClub’s platform “while the company contends with a legal overhang,” they wrote.

Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million of restricted stock units and her salary was increased to $400,000. Both executives also received $500,000 cash awards that will pay out in a year.

LendingClub’s troubles are affecting competitors. Prosper Marketplace Inc., its largest rival, has met with investors including Fortress Investment Group about potential capital injections, a person with knowledge of the matter said.

MORE here
http://www.bloomberg.com/news/articles/2016-05-17/lendingclub-shares-fall-after-investors-suspend-debt-purchases?cmpid=yhoo.headline

Wait, so LC is luring back investors by giving raises and stock to the CEO and CFO? 

I wouldn't so much mind if they did this after they right the ship, but it doesn't look great to do it while it's still listing.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 17, 2016, 02:10:44 PM
Wait, so LC is luring back investors by giving raises and stock to the CEO and CFO? 

I wouldn't so much mind if they did this after they right the ship, but it doesn't look great to do it while it's still listing.
Obviously, the board thinks these two are instrumental to rebuilding the company.  If they are good execs, they can a new job easily, probably with a large signing bonus.  Restricted stock compensates them to stay at LC, turn the company around, and bring up the share price.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 17, 2016, 04:40:01 PM
Letter from LC CEO
http://ir.lendingclub.com/Cache/1001210511.PDF?Y=&O=PDF&D=&fid=1001210511&T=&iid=4213397
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Lovinglifestyle on May 17, 2016, 07:33:15 PM
Letter from LC CEO
http://ir.lendingclub.com/Cache/1001210511.PDF?Y=&O=PDF&D=&fid=1001210511&T=&iid=4213397

I don't get the "Dear Investor" part.  Did some people receive this in their email?
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: nonattender on May 17, 2016, 07:41:44 PM
Letter from LC CEO
http://ir.lendingclub.com/Cache/1001210511.PDF?Y=&O=PDF&D=&fid=1001210511&T=&iid=4213397

I don't get the "Dear Investor" part.  Did some people receive this in their email?

Are the lawyers so firmly wrapped around the coil of LendingClub that they do not want to call a note buyer an investor in an email?

That's a bit much.  That lawyer's time could be much better spent figuring out how to shield the retail "note holders" from any harm.

Do that and you might actually save the joint.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 18, 2016, 03:16:30 AM
I got the link from Lend Academy blog post
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 18, 2016, 06:26:39 PM
Sometime it is interesting to look at what people were saying few years ago. I came across a gem from Matt Levine written when Lending Club filed SEC registration for IPO.

Lending Club Can Be a Better Bank Than the Banks
http://www.bloomberg.com/view/articles/2014-08-27/lending-club-can-be-a-better-bank-than-the-banks

Quote
None of that is exactly wrong, but here is a more accurate picture:

  • You want a loan, fill out the form, etc.
  • I open an account, think you look likely, etc.
  • A bank gives you the loan.
  • The bank sells the loan to Lending Club.
  • Lending Club keeps the loan on its balance sheet.
  • Lending Club creates an unsecured structured note referencing that loan.
  • It sells that note to me.
  • Then you make payments to Lending Club, and it makes payments on the note to me.
  • You never owe me money: You owe Lending Club money, and Lending Club owes me money.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 20, 2016, 12:26:48 AM
Just got this email. For some reason only got it for one of my accounts/emails.

I'm Scott Sanborn, President and acting CEO of Lending Club. I've been on Lending Club's leadership team for the past six years as Chief Marketing Officer and Chief Operating Officer, and I wanted to take a moment to introduce myself and describe our current focus.
 
Individual investors like you are - and will always be - the foundation of our marketplace.
 
Given recent events, my immediate focus is on how Lending Club can best serve you - our investors. We've talked to hundreds of our investors - spanning individuals to financial advisors to banks to large institutions - over the past week about the strength of our business, our operations, our people, and our data integrity. Let me assure you that we are in a strong financial position with a substantial amount of cash and securities on our balance sheet - $868 million. We plan to be around for many years to come.
 
The performance of loans facilitated through the platform remains robust. We continue to service and process borrower payments just like we always have, and the interest and principal payments that borrowers make will continue to be passed on to you just as they were before.
 
We're extremely proud of the products we're providing to both borrowers and investors, and I look forward to sharing more with you in the coming months and years about our company and our results.
 
I'm not working alone. Our Executive Team has been working together for the past six years and has deep expertise in credit, operations, marketing, finance, human resources and technology. We're also supported by one of the strongest Board of Directors in the industry. It includes Hans Morris (former President of Visa and now our Executive Chairman), Larry Summers (former US Treasury Secretary), John Mack (former CEO of Morgan Stanley), Mary Meeker (a Partner at Kleiner Perkins Caufield & Byers) and other experienced executives.
 
I will continue to keep you informed as we move ahead. In the meantime, feel free to contact our team with questions and suggestions at (888) 596-3159 7am-5pm PT, Monday through Friday, or email us anytime at investing@lendingclub.com.
 
Thank you for investing with us. I look forward to having you as an investor for years to come.
 
Sincerely,
ScottSignature
 
Scott Sanborn
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: SeanMCA on May 20, 2016, 12:54:49 AM
I didn't get anything
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: investny on May 20, 2016, 12:56:12 AM
There is another completely different email in another thread. Much more detailed email.
I think they sent them out based on account size.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: twigster on May 20, 2016, 10:23:57 AM
Quote
I think they sent them out based on account size.
I don't think so as I only received one letter (the longer one) to the personal email account, that account size is very small compared to the ROTH which did not receive the letter.  They must have some other criteria for sending them out. 
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: dompazz on May 20, 2016, 11:11:03 AM
Quote
I think they sent them out based on account size.
I don't think so as I only received one letter (the longer one) to the personal email account, that account size is very small compared to the ROTH which did not receive the letter.  They must have some other criteria for sending them out.
It's confusing to me.  It is not like they don't have the ability to send emails to every account holder.  We get emails within seconds of buying a note -- at feeding time, that's a lot of emails to send promptly.  At most, it should have taken them a few minutes to send everyone an email.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: janef on May 20, 2016, 01:11:23 PM
Quote
I think they sent them out based on account size.
I don't think so as I only received one letter (the longer one) to the personal email account, that account size is very small compared to the ROTH which did not receive the letter.  They must have some other criteria for sending them out.
It's confusing to me.  It is not like they don't have the ability to send emails to every account holder. 

I'm a small investor, and did receive the email.

There is a good explanation as to why some investors received the email, while other have not – yet. All servers have the limit of bulk emails, e.g., 500, 1000 or a bit more, for a day or hour depending on the capacity of the server. LC's server may be able to send larger quantity of bulk emails, but if they have million of investors (possible?) then it will take quite a while for every investor to receive it.
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: SeanMCA on May 20, 2016, 01:55:33 PM
I'm a small investor, and did receive the email.

There is a good explanation as to why some investors received the email, while other have not – yet. All servers have the limit of bulk emails, e.g., 500, 1000 or a bit more, for a day or hour depending on the capacity of the server. LC's server may be able to send larger quantity of bulk emails, but if they have million of investors (possible?) then it will take quite a while for every investor to receive it.

I think if they had "millions" of investors, there'd be more than just 20 regular people commenting on this forum.  8)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: AnilG on May 20, 2016, 02:13:15 PM
IIRC Renaud claimed few months ago that there are 100,000+ retail lenders on the platform. I typically use between 100,000 and 150,000 as ballpark for number of retail accounts on the platform. I am biased that marketing tend to inflate numbers so I assume this count is actually the number of accounts by retail lenders as lenders can have multiple accounts, each with unique email address. Assuming on average an household has 2 accounts, most probably there are between 50,000 and 75,000 retail lenders on the platform.

I think if they had "millions" of investors, there'd be more than just 20 regular people commenting on this forum.  8)
Title: Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
Post by: Rob L on May 20, 2016, 10:14:22 PM
I took a wild gamble and bought 2K lending club today @ $5.00.

If you really wanted to gamble, get the $5.0 call and $4.0 put. You can reap a harvest as early as tomorrow if the volatility continues, ;-)

You notice how the options market makers pinned the close/expiration today at $4.00 on the button.
Unfortunate for holders at that strike, but you have to admire the work. They owned today.