SAN JOSE — The U.S. District Court for the Northern District of California appointed lead plaintiffs in a class-action suit against LendingClub, alleging the San Francisco-based company tried to artificially inflate securities and defraud investors.
The plaintiffs, under the title LendingClub Investor Group (LIG), include Xiangdong Ding and Zhenbin Chen, who will serve as lead plaintiffs in the suit according to the Nov. 7 ruling. Ding and Chen invested in and allegedly suffered substantial monetary losses as a result of the fraud.
The securities class action lawsuit was filed on May 2 by plaintiff Matthew Veal against the defendants LendingClub Corp., Renaud Laplanche, Scott Sanborn, Carrie Dolan, Bradley Coleman and Thomas Casey.
The suit alleges that LendingClub and the defendants issued false statements and concealed adverse material facts concerning the company's business, operational and financial performance to artificially inflate shares of securities. After the alleged misrepresentations became apparent, company shares fell to $0.49 per share, less than a fifth of its previous closing price of $2.77 per share on April 25, hurting investors.
Veal alleged violations of the Securities Exchange Act of 1934 on behalf of those who purchased or otherwise acquired the publicly traded securities of LendingClub.
In July, Ravi Mallur filed a motion seeking appointment as lead plaintiff and appointment of the Rosen Law Firm of New York, specialists in class action securities lawsuits, as lead counsel in the case.
At the same time Ding and Chen moved to appoint LIG as lead plaintiff and sought approval of Pomerantz, also a New York securities specialist, as lead counsel.
Mallur initially opposed the appointment of LIG and Pomerantz as lead entities, but in November, after LIG corrected the deficiencies that Mallur raised, he withdrew his opposition.
The court found that LIG could serve as the most adequate plaintiff in the litigation based on the alleged financial loss they had suffered. Ding and Chen had a pre-existing relationship in that they were previously married to one-another and are co-parenting a son.
LIG submitted a financial sheet showing the group purchased 111,450 shares for a total outlay of $783,553 and alleged a total loss of $398,723.
The court selected LIG as lead plaintiff. Pomerantz is appointed lead counsel in the case.