NY Regulator Said to Expand Online Lending Review to More Firmsby and
New York’s financial regulator has ordered 28 online lenders to disclose whether they offer loans to state residents and to describe the types of financing they provide, according to a person briefed on the matter.
The state’s Department of Financial Services sent letters this week to firms including Prosper Marketplace Inc. and Funding Circle, according to the person, who asked not to be identified discussing a review. The letters, which were previously reported by Reuters, ask for information by June 10 and remind firms that they need to have state licenses to provide certain types of loans in New York, the person said.
The requests follow a DFS subpoena last month to LendingClub Corp. after the company disclosed lapses in internal controls and announced the departure of its chief executive officer. LendingClub, which helped pioneer the peer-to-peer model of matching borrowers with investors online, has said it intends to cooperate with the New York regulator.
"Funding Circle has not received a letter from the New York Department of Financial Services,” a spokeswoman for the company wrote in an e-mail. “To the extent the company does receive inquiries from relevant state or federal regulators, such as the New York Department of Financial Services, it would always seek to cooperate fully in providing a response." Prosper also couldn’t confirm that it has received a letter from the regulator.