LendingClub has agreed to a preliminary settlement of multiple class-action lawsuits brought by its shareholders, the latest step in the company’s efforts to move beyond a 2016 scandal.
Under the agreement, which was announced Tuesday, the San Francisco-based online lender expects to pay $77.25 million. An additional $47.75 million is expected to be covered by LendingClub’s insurance, bringing the total payout to $125 million. The deal is subject to court approval.
LendingClub runs a digital marketplace that links borrowers — often consumers who are looking to consolidate credit-card debt at a lower interest rate — with savers who fund the loans.
The class-action lawsuits were filed following the ouster of former LendingClub CEO Renaud Laplanche in May 2016, which was prompted in part by the discovery that certain loan information had been falsified. Shareholders alleged that LendingClub had inflated its stock price by concealing its operational shortcomings.
“We’re encouraged to have reached an agreement that will put this matter behind us and substantially reduces our financial risk going forward,” LendingClub CEO Scott Sanborn said Tuesday in a press release.
Still, LendingClub said that it is subject to several outstanding legal issues, including litigation and ongoing regulatory investigations.
The online lender also said Tuesday that it recorded a net loss of $92.1 million in the fourth qurater, largely as a result of the elevated legal costs.
LendingClub reported revenue of $156.5 million, up 20% from the same period a year earlier. The firm’s loan originations totaled $2.44 billion, an increase of 23% from the fourth quarter of 2016. Operating expenses totaled $170.6 million, excluding the one-time settlement costs. That was up from 4.6% from the year-earlier period.
Lending Club, once a fintech darling, has struggled to overcome the damage done by the 2016 scandal. The company recorded total losses of $300 million in 2016 and 2017.
