LendingClub Corp (NYSE: LC) Investor Securities Class Action Lawsuit 05/16/2016

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Company Name(s): 
LendingClub
Case Name: 
LendingClub Shareholder Class Action Lawsuit 05/16/2016
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NYSE: LC
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
05/16/2016
Class Period Begin: 
12/10/2014
Class Period End: 
05/06/2016
Court of Filing: 
U.S. District Court for the Northern District of California
Deadline To File for Lead: 
07/15/2016
Date Settled: 
03/16/2018
Settlement Amount: 
$125,000,000
Deadline to Participate in Settlement: 
06/25/2018
Settlement Notice: 
Settlement Proof: 
Summary: 

July 20, 2018 - The court approved the settlement and entered the order approving the plan of allocation, and dismissing the action with prejudice.

March 16, 2018 - The court preliminarily approved the settlement.

February 21, 2018 - Parties filed a stipulation of settlement.

June 15, 2017 - The lead plaintiff filed an amended consolidated complaint.

May 25, 2017 - The court granted in part and denied in part defendants motion to dismiss.

January 20, 2017 - Defendants filed a motion to dismiss.

December 9, 2016 - The lead plaintiff filed an amended consolidated complaint.

August 15, 2016 - Lead plaintiff and lead counsel were appointed and all cases were consolidated.

July 15, 2016 - Lead plaintiff motions were filed.

May 15, 2016 - An investor in shares of LendingClub Corp (NYSE: LC), filed a lawsuit in the U.S. District Court for the Northern District of California over alleged violations of Federal Securities Laws by LendingClub Corp in connection with certain allegedly false and misleading statements made between December 11, 2014 and May 6, 2016.

According to the complaint the plaintiff alleges on behalf of purchasers of LendingClub Corp (NYSE: LC) securities pursuant and/or traceable to LendingClub Corp’s Registration Statement and Prospectus issued in connection with the Company’s initial public offering on or about December 11, 2014 (the “IPO” or the “Offering”) and/or on behalf of purchasers of LendingClub Corp (NYSE: LC) securities on the open market between December 11, 2014 and May 6, 2016, that the defendants violated Federal Securities Laws.

More specifically, the plaintiff claims that between December 11, 2014 and May 6, 2016 Defendants made false and/or misleading statements and/or failed to disclose that LendingClub Corp’s internal controls were inadequate to ensure that LendingClub Corp’s loans conformed to its customers’ criteria, that LendingClub’s internal controls were inadequate to ensure that relevant interests in third-party transactions were fully and timely disclosed, and that as a result of the foregoing, LendingClub Corp’s public statements were materially false and misleading at all relevant times.

On December 11, 2015, it was reported that “the California Department of Business Oversight, which oversees securities and lending activity in that state, sent requests to 14 companies for details about their lending practices, investors and business models.” It was then reported that on December 14 a spokesman for the Department of Business Oversight, sent out an email naming LendingClub Corp as one of the 14 companies.

LendingClub Corp reported that its annual Total Revenue rose from $285.45 million in 2013 to $567.74 million in 2014 while its Net Income of $7.31 million declined to Net Loss of $32.89 million in 2014.

Shares of LendingClub Corp (NYSE: LC) declined from $25.74 per share in December 2014 to as low as $6.68 per share on January 20, 2016.

On May 9, 2016, LendingClub Corp disclosed that on May 6, 2016, the Company’s Board of Directors had accepted the resignation of Renaud Laplanche as the Company’s Chairman and Chief Executive Officer (“CEO”). LendingClub Corp reported that Renaud Laplanche’s resignation was precipitated by an internal review that found that the Company had sold $22 million in loans, made to consumers with low credit scores, to a single investor (later reported to be Jefferies LLC (“Jefferies”)), in violation of the investor’s “express instructions.”
LendingClub Corp also disclosed “a failure to inform the board’s Risk Committee of personal interests held in a third party fund while the Company was contemplating an investment in the same fund.”

It was subsequently reported that Renaud Laplanche had failed to fully disclose a personal interest he held in Cirrix Capital while the Company was contemplating investing in the fund—an investment that Renaud Laplanche had himself proposed to LendingClub Corp’s risk-management committee—and that LendingClub Corp Board Member John Mack also held an undisclosed interest in Cirrix Capital.

On May 9, 2016, post-market, news outlets reported that the SEC was investigating LendingClub Corp’s disclosures.
On May 10, 2016, news outlets reported that Goldman Sachs and Jefferies had halted their purchases of LendingClub Copr loans. That same day, the U.S. Treasury Department issued a White Paper describing the online lending industry as “untested” and calling for more regulation.

Shares of LendingClub Corp (NYSE:LC) declined on May 16, 2016, to as low as $3.59 per share.