In re LendingClub Securities Litigation

Good Law

254 F. Supp. 3d 1107·2017 WL 2289186·2017 U.S. Dist. LEXIS 80531

United States District Court, Northern District of CaliforniaMay 25, 2017No. C 16-02627 WHA, No. C 16-02670 WHA, No. C 16-03072 WHACalifornia6,765 words

Opinion

Lead Opinion

Alsup, J.

*1110 ORDER RE MOTION TO DISMISS CONSOLIDATED COMPLAINT

INTRODUCTION

In this securities action, defendants move to dismiss in three separate motions. For the reasons stated below, the motions are Granted in part and Denied in part.

STATEMENT

At all relevant times, defendant Len-dingClub Corporation operated an online peer-to-peer marketplace to match borrowers and investors for a variety of loans. Defendant Renaud Laplanche founded the company and served as its chief executive officer and chairman of the board until May 4, 2016.

LendingClub did not itself originate loans. Once a borrower and a lender matched in the marketplace, LendingClub would contact a partner bank, which would originate the loan, disburse funds to the borrower, and immediately sell that loan to LendingClub. LendingClub purchased the loans with funds it received from the matched lenders. It then serviced the loans on behalf of its lenders. It generated its revenue from origination fees and servicing fees (Consolidated Compl. ¶¶ 12, 29-30).

Below is a diagram illustrating this process between a- borrower, B and a lender, L, as follows: (1) B and L match from the pools of borrowers and lenders in…

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