Very clear quotes from a lawyer quoted on Techcrunch. They also ask the question, as to how these SEC regulations will apply to others in US. No doubt we will hear more over the next while.
Lending Club Puts Hold on Lending Activity While It Sorts Out Some Legal Issues
… … its borrowing practices could be interpreted as the sale of securities, which requires a license Lending Club doesn’t appear to have.This suspicion has been reinforced by Veronica McGregor, an attorney with the law firm Perkins Coie. She says that “it looks like they are getting themselves a license to buy and sell securities.”
These are issues that other P2P lending sites – such as Prosper, Virgin Money, and Zopa – will have to face if they haven’t already.
For our readers here in Canada, CommunityLend is working closely with the applicable Canadian regulators, and has been for over 9 months now. This was highlighted in this recent piece from the Toronto Star.
4 responses so far ↓
Alan Browne // April 9, 2008 at 8:15 pm |
9 months to get regulatory issues in place? It sounds like the regulators are dragging their heels in typical bureaucratic fashion. No guts.
Colin // April 9, 2008 at 8:27 pm |
@Alan …. disruption produces interesting times. p2p lending introduces many new characteristics that were never anticipated when the original regulations were drawn up, long before internet. Once the smoke settles, I am sure all will become clear.
Dave // April 11, 2008 at 11:27 pm |
The idea that ‘government regulation’ should be the default/norm is dangerous. IOU Central, which by all accounts is attempting to run a legitimate business, has been shutdown because the government doesn’t know their own position on social lending? The purpose of ‘regulation’ should not be to needlessly limit innovation, but unfortunately that’s exactly what’s happening in Canada right now.
Don’t “social lenders” always understand what they’re getting into, by their nature? You get higher interest, with higher risk. It’s easy to understand, if you’re the sort of person who would be involved in social lending in the first place. Who is the government protecting with these regulations?
Keep up the good fight, CommunityLend.
Dave.
Colin // April 12, 2008 at 8:28 pm |
@Dave .. excellent points, and understanding risk is crucial. Degree of government regulation is always a touchy subject, and its natural to vote for less rather than more. I would also think that Canadians like to expect a certain baseline of consistency of risk definition, so that they can properly understand and believe what they are reading prior to making their own risk assessment.
Regulation aside, we are moving mountains at CommunityLend to ensure the information presented is valid, validated and representative of the decision making lenders will expect.
Colin