Texas fines LendingClub $400,000 for unregistered sales
The online lending marketplace claims it was selling ‘covered’ securities
The Texas Securities Commission has fined LendingClub Corp., a national online lending marketplace, $400,000 for the unregistered sales of loans in the state.
The San Francisco-based company had been selling notes to Texas residents since December 2014, but voluntarily stopped the sales in September 2019 as the Texas State Securities Board investigated LendingClub’s compliance with the Texas Securities Act.
In a release, state officials said LendingClub cooperated with securities board staff during the investigation.
LendingClub operates an online platform that matches borrowers with investors who want to fund their loans. Since becoming a public company, LendingClub has taken the position that the notes it issues and sells are covered securities like its own common shares, which means they qualify for federal exemptions from state securities regulations.
The consent order into which it entered with the state, however, found that LendingClub must be registered as a dealer in Texas to sell federal covered securities such as the notes.
In addition to the fine paid to the state, LendingClub will contribute $25,000 to the Investor Protection Trust, a nonprofit organization that supports investor education efforts in Texas and other states.
[More: LendingClub introduces peer-lending robo for advisers]
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