[jdaun]

http://www.bloomberg.com/news/articles/2016-05-09/lendingclub-plunges-after-ceo-quits-firm-finds-loan-sale-abuse

[TravelingPennies]

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

[Fred]

from: jdaun on May 09, 2016, 10:24:57 AM

[dompazz]

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.

[rawraw]

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

[Quackhead]

from: Fred on May 09, 2016, 10:33:39 AM

[yojoakak]

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

[Ran]

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.

Quote"> from: yojoakak on May 09, 2016, 11:23:34 AM

[LonghornSF]

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[TravelingPennies]

from: yojoakak on May 09, 2016, 11:23:34 AM

[BruiserB]

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.

[TravelingPennies]

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[elumbra]

Just got this from Lending Robot.  Anyone with a Lending Robot account probably got this as well.
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[investny]

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???

[lascott]

from: Ran on May 09, 2016, 11:44:27 AM