COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
SMALL LOAN LICENSING
Docket No. 2011-024
In the Matter of
LENDING CLUB CORPORATION
Redwood City, California
Small Loan License No. SL0892
WHEREAS, LendingClub Corporation, Redwood City, California, a licensed small loan company under Massachusetts General Laws chapter 140, sections 96 to 114A, and 209 CMR 20.00 et seq. ("LendingClub" or the "Corporation") has been advised of its right to Notice and Hearing pursuant to General Laws chapter 30A, and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("Consent Agreement") with representatives of the Division of Banks ("Division") dated June 1, 2011, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a small loan company, LendingClub agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of LendingClub was conducted pursuant to General Laws chapter 140, sections 96 to 114A, as of June 9, 2008 (the "examination/inspection"). Because of concerns regarding the Corporation's compliance and financial condition, the examination/inspection continued in 2010 and concluded on March 10, 2011, to assess the Corporation's level of compliance with applicable Massachusetts and federal laws and the Division's regulations governing the conduct of those engaged in the business of a small loan company in the Commonwealth; and
WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of LendingClub alleged violations of state laws and regulations including deficiencies in LendingClub's current financial condition and compliance program.
NOW COME the parties in the above-captioned matter, the Division and LendingClub, and stipulate and agree as follows:
- No later than sixty (60) calendar days following the execution of this Consent Order, LendingClub will cease engaging in the business of a small loan company in Massachusetts, as such business is described in General Laws chapter 140, section 96; including, but not limited to, making small loans as defined therein and/or directly or indirectly engaging, for a fee, commission, bonus or other consideration, in the business of negotiating, arranging, aiding or assisting the borrower or lender in procuring or making loans of six thousand dollars or less, for which the amount paid or to be paid for interest and expenses, exceeds an amount equivalent to twelve per cent per annum, whether such loans are actually made by LendingClub or by another party.
- LendingClub shall notify the Division immediately, in writing, when it has ceased engaging in the business of a small loan company, as set forth above, and shall voluntarily surrender its Massachusetts small loan company license SL0892. The notification shall also include: (a) a detailed list describing all open Massachusetts small loan contracts made, arranged, assigned, and/or purchased by the Corporation; and (b) a current list of the Corporation's Massachusetts investors with investments that are still outstanding, including names, dates of investment, and dollar amounts. Upon receipt of such notification from the Corporation, the Division will effect the surrender of the license by updating LendingClub's status to "surrendered" in the Division's records.
- Lending Club shall conduct a review of all Massachusetts small loans originated since April 17, 2007 and shall reimburse each borrower from whom borrower origination fees were collected in excess of twenty (20) dollars during a consecutive twelve (12) month period. The amount of such reimbursements shall equal the amounts collected as administrative fees that were in excess of the amount permitted under 209 CMR 26.01(1)(a).
- Lending Club shall conduct a review of all Massachusetts small loans originated since April 17, 2007 and determine whether default charges were collected by the Corporation, and shall reimburse all consumers from whom a default charge was collected in excess of five (5) percent of each installment or five (5) dollars, whichever is less. The amount of such reimbursements shall equal the amounts collected as default charges that were in excess of the amount allowed by 209 CMR 26.01(4)(c).
- LendingClub shall conduct a review of all Massachusetts small loans originated since April 17, 2007 and determine whether "unsuccessful payment fees" were collected by the Corporation, and shall reimburse all consumers from whom such fee in excess of ten (10) dollars was collected. The amount of such reimbursements shall equal the amounts collected as "unsuccessful payment fees" that were in excess of the amount allowed by M.G.L. c. 140, section 100.
- Within twenty (20) days of the execution of the Consent Agreement, LendingClub shall submit a payment of two thousand six hundred fifty dollars ($2,650.00) for the full amount of the unpaid assessment as a result of LendingClub's late filing of its 2009 Small Loan Company Annual Report. The payment shall be made payable to the "Commonwealth of Massachusetts" and mailed to the Office of the Commissioner of Banks, Consumer Finance Company Examination Unit, 1000 Washington Street, 10th Floor, Boston, MA 02118.
- Within twenty (20) days from the execution of the Consent Agreement, LendingClub shall submit to the Division a payment of two hundred dollars ($200.00) for the Division's relocation investigation fee, in consideration of the Corporation's change of office location, in accordance with M.G.L. chapter 140, section 102.
- Within twenty (20) days of the execution of the Consent Agreement, LendingClub shall submit payment of eighteen thousand four hundred eighty ($18,480.00) in satisfaction of the full amount owed for the costs of the Division's examination/inspection, as also set forth in the invoice issued to LendingClub. The payment shall be made payable to the "Commonwealth of Massachusetts" and mailed to Division of Banks, Commonwealth of Massachusetts, P.O. Box 3952, Boston, Massachusetts 02241-3952.
- Within ninety (90) days after the execution of the Consent Agreement, the Corporation shall submit evidence of the reimbursements issued pursuant to Sections 3, 4, and 5 of the Consent Order. Evidence of the reimbursements shall include the consumers' names, the dates the loans were originated, the check numbers, the amount of the reimbursements, and certified mail receipts to illustrate the consumers' receipt of the reimbursements.
- The provisions of this Consent Order shall not limit, estop, or otherwise prevent any other state agency or department, from taking any other action affecting LendingClub or any of its officers and directors, or their successors or assigns.
- In consideration of this Consent Order, the Division agrees not to pursue any measures relative to this matter unless the Division is made aware of material information that is not addressed in this Consent Order, or if LendingClub fails to comply with the terms of this Consent Order.
- This Consent Order shall become effective immediately upon the date of its issuance.
- The provisions of this Consent Order shall be binding upon LendingClub, its officers and directors, their successors and assigns, and those persons in active participation with it, directly or indirectly, acting individually or through any corporate or other entity.
- In accordance with the terms of the Consent Agreement entered by LendingClub and the Commissioner, LendingClub has waived all rights of appeal that it may have relative to this Consent Order or any of its provisions.
- The provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Consent Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
- This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements, promises, representations, or warranties other than those set forth in this Consent Order.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 1st day of June, 2011
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts