Michael P. Regan is a Bloomberg Gadfly columnist covering equities and financial services. He has covered stocks for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

Sometimes our oh-so-efficient stock market can resemble an episode of the "Three Stooges."

Just take a look at what happened after JPMorgan Chase CEO Jamie Dimon said during a panel discussion Tuesday morning that the bank was going to team up with an unidentified online lender. 

Investors jumped to the conclusion that he must be talking about LendingClub and bid that company's shares up almost 6 percent.

Power of Suggestion
Shares of LendingClub jumped nearly 6 percent on speculation of a partnership with JPMorgan Chase.
Source: Bloomberg
Intraday times are displayed in ET.

A joint venture between those two apparently was construed as bad news for another online lender, On Deck Capital, so those shares dove almost 10 percent during the session:

Plot Twist
On Deck shares fell, but they rebounded the next day after its partnership with JPMorgan was disclosed.
Source: Bloomberg
Intraday times are displayed in ET.

Then after the market closed, we got the pie to the face:  It was disclosed that On Deck was actually the company JPMorgan was teaming up with, as Bloomberg's Hugh Son reported

Nyuck, nyuck, nyuck! On Deck's shares jumped more than 40 percent in early trading Wednesday. 

This bit of trading slapstick actually may prove to be just a minor piece of comic relief compared with the other plot lines involved in this partnership. First, from a bird's-eye view, it's intriguing how another member of the new crop of online lenders that sought to disrupt the big banks is teaming up with one instead. LendingClub's shares got a big boost in April when the company announced a partnership with Citigroup. If you can't disrupt them, join them. 

More intriguing, however, is what might be gleaned from the market's lightning-quick conclusion when it came to the company with which JPMorgan was teaming up. On Deck may have been a surprising choice because of a backstory that is, well, let's be generous and call it "colorful."

That tale was told best by Zeke Faux and Dune Lawrence in a Bloomberg Businessweek feature last year. Like all classic Zeke Faux stories, it includes a cast of characters who are, well, let's be generous and call them "colorful."

Helping drive the growth that led to On Deck's loans reaching the 10-digit realm was a ragtag collection of  merchant cash-advance brokers who sound like they very well could be the last shot for struggling businesses to keep the lights on before turning to actual loan sharks. The outside brokers bring in the clients and On Deck's algorithms, which are what caught JPMorgan's interest,  do the work of loan officers by performing due diligence on the borrowers in algo-fast speed.   

The article describes people who got into the cash-advance brokering business after being arrested on stock fraud charges; a recovering heroin addict on probation for a motel stickup; and others convicted of insider trading, embezzlement, gambling and dealing ecstasy.

(There was even one who stopped showing up for work after robbing a bank. Literally. That's one way to disrupt the banking industry!)

On Deck's interest rates were averaging 54 percent, according to Businessweek, but one borrower quoted was paying effective rates in the triple digits.  

“It’s crack for a business," the borrower told the magazine. "You can’t get off of it.” 

On Deck has been trying to reduce its dependence on these brokers, and teaming up with JPMorgan may allow it to make strides in that direction and polish a reputation in need of polishing. So it's a great opportunity for that company. But is it the best decision for JPMorgan? After all, this sounds like the type of operation that may be able to fly below the radar for some time when it's done on a small scale, but quickly attract the attention of people like Elizabeth Warren when a big bank is associated.  

Branching Out
JPMorgan Chase is teaming up with an online lender that set out to disrupt the big banks.
Source: Bloomberg

When describing the new venture on Tuesday, Dimon said it offered “the kind of stuff we don’t want to do or can’t do, but there’s somebody else who can do it and do it probably well,” he said.  The product will carry the Chase brand, and the loans will use Chase pricing, a spokeswoman for the bank said, so it's possible the bank will be able to leverage On Deck's technology without being tainted by its backstory.  

Still, this choice of partner by JPMorgan is, well, let's be generous and call it "colorful." 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Michael P. Regan in New York at

To contact the editor responsible for this story:
Daniel Niemi at