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Author Topic: What will happen if Lending Club becomes a public company?

W
  • Posts: 5
Just wondering...if it got listed....what is the effect on investors like us?
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  • Posts: 300
Once IPO, LC will not have go through each state to get approval to offer loans to each state's lenders and borrowers.

As the stock price will be influenced by revenues and earnings of Lending Club, LC will most probably focus on things that bring more revenue and reduce costs - bringing more borrowers to the platform, relaxing lending criteria, increasing lending amount, focusing more on institutional investors, expanding in to other unsecured and secured loans, establishing more partnerships with loan originators.

Individual lenders will get the same treatment as retail investors get from stock market and brokerages. Most likely, LC will move individual lenders to third parties to manage.

Just my guess ...

from: Watermen on March 03, 2013, 08:39:13 PM
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b
  • Posts: 152
It's called the Blue-Sky exemption.

http://en.wikipedia.org/wiki/Blue_sky_law

By virtue of a Securities and Exchange Commission (SEC) order in January 1998 that designates NYSE Arca Tier I listed securities as covered securities for the purposes of Section 18(a) of the Securities Act of 1933, Tier I listings are afforded Blue Sky exemption from state securities laws in all 50 states (SEC Release No. 3-7494, January 2, 1998). Under the SEC's order, Section 18(a) preempts any state registration and fee requirements that would otherwise apply to Tier I listings.
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C
  • Posts: 2
I get the feeling that we will see a loss of liquidity via foliofn when LC goes public.  Currently there are quite a few states that do not allow people to invest directly through LC.  My gut tells me when all states are allowed to invest directly that the Foliofn market for notes will dry up.  Just my 2 cents.
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T
  • Posts: 6588
Right - securities listed on an exchange are not subject to state securities regulation, but that would only relate to LC shares that are traded after the IPO. The debt offering through which we buy notes is separate, and would have to have its own basis for exemption from state regulation no?

I know that you get blue sky preemption for securities that are senior to securities traded on an exchange, but I dont know that that would apply here - the notes should be senior to LC common stock, but stranger things have happened at sea.  But then the notes would have to stay on LCs books no?  If they did an spv for bankruptcy remoteness, then the notes would need their own basis for exemption from state laws no?  Excuse my typos!
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T
  • Posts: 6588
All reasonable questions for which I'm sure there's an acceptable answer. I don't know it, but Peter's gotten this word straight from LC, so I'm sure they've done their DD.
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Now, I am not a securities lawyer so I can't say for sure. But I have been told by the CEO of Lending Club on a number of occasions that the blue sky exemption will allow Lending Club to operate for retail investors in all 50 states. As Bryce says, I am sure they have done their due diligence here and that is indeed correct.
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T
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Peter, perhaps ask off hand if they've thought how that exemption will apply if they eventually move the notes to a bankruptcy remote SPV.  I'm just curious.

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