- Company Name
- LendingClub Corporation
- Stock Symbol
- Class Period
- February 28, 2015 to April 25, 2018
- Motion Deadline
- July 2, 2018
- Northern District of California
The complaint charges LendingClub and certain of its officers with violations of the Securities Exchange Act of 1934. LendingClub operates an online marketplace platform that connects borrowers and investors in the United States. LendingClub purportedly delivers more efficient and affordable access to credit through its technology platform, creating cost efficiencies and passing the savings on to borrowers in the form of lower rates and to investors in the form of solid returns.
Then on April 25, 2018, the FTC announced it had filed a complaint against LendingClub alleging violations of the FTC Act for falsely promising consumers they would receive a loan with “no hidden fees” and the GLBA for failing to provide customers with a clean and conspicuous privacy notice. According to the FTC, it was charging LendingClub with “falsely promising consumers they would receive a loan with ‘no hidden fees,’ when, in actuality, the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans.” The FTC alleges in its complaint that LendingClub “recognized that its hidden fee was a significant problem for consumers, and an internal review noted that its claims about the fee and the amount consumers would receive ‘could be perceived as deceptive as it is likely to mislead the consumer.’” An attorney for one of the Company’s largest investors also warned the Company that “the ‘relative obscurity’ of the up-front fee in light of the Company’s prominent ‘no hidden fees’ representation could make the company a target for a law enforcement action.”
On this news, the price of LendingClub securities fell over 15%, to close at $2.77 per share on April 25, 2018.