Author Topic: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse  (Read 65981 times)

BruiserB

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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.

yojoakak

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From the 8-K:

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


What does this mean?

http://ir.lendingclub.com/Cache/c34233919.html

mo

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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 didnít meet the investorís 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.

LonghornSF

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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.

Ran

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LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #19 on: May 09, 2016, 03:41:55 PM »
From the 8-K:

"The loans in question failed to conform to the investorís 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.

WES

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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.

newstreet

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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

mo

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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?

newstreet

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Cherry picking the best loans for the fund.

Rob L

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PhilGD

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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.

LonghornSF

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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.  >:(

rawraw

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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.


newstreet

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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. 

Fred93

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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.