Lending Club under probe by U.S. Justice Dept, receives subpoena

Tue May 17, 2016 12:40am EDT
 
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By Heather Somerville and Rishika Sadam

(Reuters) - The U.S. Department of Justice has opened an investigation of Lending Club Corp (LC.N: Quote), the online lender whose chief executive, Renaud Laplanche, was forced out last week after an internal probe found the company had falsified documentation when selling a package of loans.

The company also said in a quarterly filing with the Securities and Exchange Commission on Monday that a number of its large investors had halted investments in Lending Club loans in the wake of Laplanche's resignation, which could have a material effect on the company's performance going forward.

Lending Club said it did not know what impact the slowdown in investment will have going forward or whether the investors will return.

The San Francisco-based company is the largest of so-called marketplace lenders, which sell their consumer and small-business loans on to investors.

Lending Club said in its filing that it received a federal grand jury subpoena on May 9, the same day it announced the resignation of Laplanche, the company's founder and a well-known figure in the online lending business.

The events have raised broad questions about the transparency and viability of the burgeoning sector.

Lending Club said in the filing that it "intends to cooperate with the DOJ and the SEC." The company declined further comment.

The Department of Justice did not immediately respond to a request for comment.   Continued...

 
A woman looks at her phone as she passes by a Lending Club banner on the facade of the the New York Stock Exchange December 11, 2014. REUTERS/Brendan McDermid