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Lending Club

By:
 Anooshree Sinha and Corrine Snow under the supervision of Howell Jackson   Published: August 2017
Product number:
CSP028
Length:
16 Pages
English:
PDF
Product Type:
Workshop-Based Case Study

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Abstract

Lending Club, an online peer-to-peer lending (P2P lending) site, is considering changes in its business model. It faces issues such as whether its funding of consumer loans may result in the issuance of "securities" rather than "loans" and thus will be subject to registration requirements under Section 5 of the Securities Act of 1933. Before adopting any changes to its business model, Lending Club is reviewing the application of federal securities laws to its operations. The Lending Club case study hinges on the definition of a “security”; this understanding is central to the regulation of financial institutions. Participants discuss a memorandum outlining the U.S. legal framework to determine if a product is a security, who the issuer of the security is (if any), and what risks are associated with registering with the Securities and Exchange Commission (SEC). This case study is used in a simulation course on Financial Regulation and is helpful as a practical, hands-on component to a financial regulations or administrative law course.

Learning Objectives

Examine and understand when a product may fall under the definition of a security and therefore be subject to registration requirements with the SEC.

Evaluate the risks and benefits associated with various business strategies in a practical scenario.

Practice presentation and legal writing skills.

Subjects Covered

SEC, Securities Regulation, Securities Act of 1933, Securities Exchange Act of 1934, Marketplace Lending, Peer-to-Peer Lending, Financial Regulation, Finance and Banking, Government, Financial Technology, Financial Services.

Setting

Geographic: US

Industry: Financial Services, Financial Technology

Event Year Begin: 2008

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