While it will hardly come as a shock following the turbulent events disclosed one week ago, which culminated with the “resignation” of CEO Renaud Laplanche, amid a series of complicated backdoor ‘related party’ transactions which could even implicate none other than company director and former Morgan Stanley CEO John Mack, moments ago LendingClub unveiled in its 10-Q filing that “on May 9, 2016, following the announcement of the board review described elsewhere in this filing, the Company received a grand jury subpoena from the U.S. Department of Justice (DOJ). The Company also contacted the SEC. The Company intends to cooperate with the DOJ and the SEC. The DOJ and the SEC may have additional requests, and no assurance can be given as to the timing or outcome of these matters.”
Worse, the fingerpointing has begun:
During the second quarter of 2016, we identified a material weakness in our internal control over financial reporting, as described further in “Changes in Internal Control Over Financial Reporting” below. As a result of the circumstances giving rise to the material weakness described below, and in connection with the board review of specific near-prime loan sales to an investor and other compliance matters described elsewhere herein, the Company’s acting CEO and CFO have concluded that the Company’s disclosure controls and procedures were not effective at a level that provides reasonable assurance that the objectives of disclosure controls and procedures were met as of March 31, 2016.
The identified material weakness is the result of the aggregation of control deficiencies related to the Company’s “tone at the top,” which manifested in three primary areas described further below.
The problems just happen to go further back than initial revealed:
In addition, the Company has concluded that the material weakness identified as of March 31, 2016 also existed at the end of 2015 and therefore that its disclosure controls and procedures were ineffective and not operating at the reasonable assurance level as of December 31, 2015.
A new 10K is coming:
As described below, the Company intends to amend its Annual Report on Form 10-K for the year ended December 31, 2015 solely for the purpose of amending management’s assessment of internal control over financial reporting.
The company also added the boilerplate that “the Company may be subject to legal proceedings and regulatory actions in the ordinary course of business.” Replace “may” with “certainly will”, and one can get a sense of the rapidly dimming future for what until recently was the dominant player in the US peer 2 peer lending industry.
Finally, the revised risk factors reveals some new and unexpected Easter eggs:
- In the five business days since we announced our review and resignation of our CEO, we have experienced a slowdown in a significant amount of investment capital available on our platform and may not be able to attract additional investors to invest in loans, or we may need to grant investors significant inducements in order to attract capital or use our own capital.
- A relatively small number of investors account for a large dollar amount of investment in loans funded through our marketplace and we may be required to increase our repurchase obligations to attract additional investors
The stock, as expected, is tumbling on the news. To all the over eager BTFDers today, our condolences.
As LC stock plunges back to record lows:
Meanwhile, we have just one question to company board member Larry Summers:
Dear @LHSummers any comment on the company of which you are a board member being subpoenaed by the DOJ?
— zerohedge (@zerohedge) May 16, 2016
The post LendingClubbed: Stock Plummets On News Of A DOJ Grand Jury Subpoena As Accusations Fly appeared first on crude-oil.top.