Lending Club Agrees To Pay $2 Million Penalty To Resolve Investigation Into Its Lending Practices
lendingclub_settlement_agreement.pdfSAN FRANCISCO – Peer-to-peer lending company LendingClub Corporation of San Francisco, Calif., has agreed to pay a civil penalty of $2 million to resolve allegations that it violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), announced United States Attorney Alex G. Tse, Special Agent in Charge John F. Bennett of the Federal Bureau of Investigation San Francisco Field Office, and Federal Deposit Insurance Corporation (FDIC), Office of Inspector General Special Agent in Charge Wade V. Walters.
FIRREA authorizes the federal government to seek civil penalties against companies and individuals that violate various predicate criminal offenses affecting federally insured financial institutions, including false statements to financial institutions, bank fraud, and wire fraud. In this case, the United States alleged that from January 2009 to September 2010, LendingClub made misrepresentations to its FDIC-insured loan originator, WebBank. Further, the United States alleged that due to Lending Club’s misrepresentations, WebBank originated over 200 loans to borrowers who did not satisfy WebBank’s credit requirements. The government alleged that LendingClub made these misrepresentations fraudulently to increase the volume of loans available for investment on its platform and to meet its monthly loan origination goals.
“As technology continues to provide more creative means for financial transactions, so, too, must financial technology companies be careful to abide by the rules that ensure stability and fairness in these emerging markets.” said U.S. Attorney Tse. “We will vigorously investigate wrongful conduct in this industry.”
“The FBI is committed to protecting the American people by investigating violations of law by all entities, including financial institutions,” said Special Agent in Charge John F. Bennett of the FBI San Francisco Division, “The FBI prioritizes combatting white-collar crime and will not tolerate any business or institution that engages in false representation for their own benefit and does not abide by the law."
“This settlement shows that allegations of misconduct to advance personal or corporate goals will be vigorously investigated and pursued,” said FDIC OIG Special Agent in Charge Wade Walters. “Law enforcement agencies worked together to address these allegations and obtain a settlement in the pursuit of justice.”
The settlement was the result of a coordinated effort between the U.S. Attorney’s Office for the Northern District of California and the Securities and Exchange Commission, with investigative support from the FBI and FDIC-OIG. Assistant U.S. Attorney Kimberly Friday is handling the matter on behalf of the U.S. Attorney’s Office for the Northern District of California, with substantial assistance provided by Assistant U.S. Attorney Lila Bateman from the U.S. Attorney’s Office for the District of Colorado and Assistant U.S. Attorney Michael Sew Hoy from the U.S. Attorney’s Office for the Central District of California.
The claims resolved by this settlement are allegations only, and there has been no admission of liability.