The situation is getting more complicated for the troubled online-lender LendingClub Corp (NYSE:LC) as a class action lawsuit has been filed against the company. The class action lawsuit has been filed by Khang & Khang LLP and the law firm revealed that the suit revolves around possible violation of securities laws by LendingClub.
The class action is filed on behalf of LendingClub Corp investors who acquired shares in the company during a certain period defined as the class period between December 11, 2014 and May 6, 2016.
Investors who acquired shares of LendingClub during the class period have been encouraged to contact the law firm todiscuss their rights in the class action issue.
However, Khang & Khang said in a press release that the class action had not been certified, which means that investors are not represented by an attorney until the certification is official.
What is the complaint?
It is alleged that LendingClub was not honest with its investors during the class period. Among other things, the company is said to have failed to disclose that its internal controls were unable to ensure that loans that the company provided conformed to the criteria of its customers. Additionally, the company is accused of not revealing that its internal controls were inadequate in ensuring that interest in third-party deals was properly and timely disclosed to investors.
Because of the failure to make full disclosures about its internal controls, Khang & Khang says that LendingClub ended up publishing false and misleading statements. But when the true details came out, investors in the company suffered damages. As such, the law firm wants the company to be held responsible for violation of Federal securities laws.
LendingClub Corp fired its CEO in May and recently promoted Scott Sanborn to the position of permanent CEO as part of the efforts to restore investor confidence following the weak internal controls fallout.