The Lending Club, which connects small borrows to individual and institutional lenders has fallen under heavy scrutiny by the Department of Justice and others. It was revealed last week that the company received a subpoena from the Department of Justice. It’s not exactly clear what the DOJ is investigating but it was also disclosed last week that the company CEO and founder Renaud Laplanche was fired over the sale of $22 million in loans to an investment bank Jeffries. In addition, the company also revealed that Mr. Laplanche may have been privately investing in in a fund that the company holds a position in.
Lending Club’s difficulties compounded continued last week as shareholders filed a class action lawsuit claiming the online marketplace firm misled investors about its lending practices in order to keep its stock price high. Filed Monday in the U.S. District Court for the Northern District of California, the complaint of the lawsuit alleges: “As a result of Defendants’ false and/or misleading statements, LendingClub securities traded at inflated prices. However, after disclosure of Defendants’ false and/or misleading statements, LendingClub’s stock suffered a precipitous decline in market value, thereby causing significant losses and damages” to the plaintiffs.
Jeffrey Newman represents whistleblowers