Lending Club founder settles; banks fear weak third quarter

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Fined and suspended
Renaud Laplanche, the co-founder and former CEO of online lender LendingClub, agreed to pay $200,000 and be banned from the securities industry for three years to settle Securities and Exchange Commission fraud charges. In addition, LendingClub Asset Management (LCAM), an investment management unit of LendingClub, will pay a $4 million fine while Carrie Dolan, the company's former chief financial officer, will pay $65,000.

According to the SEC, LCAM bought loans from Lending Club in order to create the appearance that there was greater demand for the loans than actually existed, "something that would have cost Lending Club potential revenue, and could have damaged its reputation as a liquid and efficient credit marketplace." The settlement is not expected to affect Laplanche's ability to run Upgrade, a rival online consumer lender he founded after leaving LendingClub two years ago. Financial Times, New York Times, American Banker here and here

Blockchain breakthrough
Japan will become "the first major economy to launch a domestic payments system based on blockchain technology when three Japanese banks start offering customers free real-time money transfers via a new mobile app." The platform was developed by Ripple, the U.S.-based blockchain company, and a Japanese joint venture involving the company. "The launch of the MoneyTap system … could be an important step in helping Japan to achieve its goal of reducing the use of cash, which still accounts for 80% of transactions in the country."

That may be a notable event, but the 10th anniversary of bitcoin and blockchain isn't necessarily a happy one, as "by many measures [bitcoin] will be limping into its anniversary."

The Economist is more blunt: "Bitcoin and other cryptocurrencies are useless," it reports, although "for blockchains, the jury is still out."

Wall Street Journal columnist Irving Wladawsky-Berger urges proponents to "have patience. Overselling is often the case with just about all promising technologies."

Wall Street Journal

Less-than-great expectations
With third quarter earnings reports just a few weeks away, bank stocks suffered their worst week since March last week, "the latest sign that investors remain cautious on the financial sector even as the U.S. economy grows at the fastest pace in years." The 4% drop in the S&P 500 financials sector wiped out all of their year-to-date gain after hitting a six-month high as recently as September 20. "The underperformance of financial stocks after the group rose 20% in 2016 and 2017 shows that investor worries about the global economy continue to hang over the latest leg of the bull market."

Indeed, analysts are expecting "another tepid quarter" from Wall Street because "the same volatility that has boosted banks' stock-trading business is hampering their fixed-income, commodities and currencies desks. The threat of a trade war and increasing uncertainty about the inflation outlook have roiled stocks at times this year, giving a lift to traders dealing in stocks and derivatives tied to volatility. Yet the uncertainty has crimped some corporate activity, such as cross-border investment and debt issuance—major drivers of trading in interest rates, currencies and bonds."

Financial performance isn't the only thing that has banks worried. "Some large U.S. banks have seen an uptick in attempted cyberattacks in recent weeks," at the same time federal government agencies are warning the banks "to be on high alert for potential cybersecurity breaches.

Financial Times

The City of Light shines
Paris has moved ahead of Frankfurt and Dublin as "the favored financial trading hub for continental Europe" in a post-Brexit world. "Some of the world's biggest banks and asset managers," including BlackRock, JPMorgan Chase, Bank of America and Citigroup, "are steering their EU operations away from London to the French capital. Paris seems set to triumph in trading — a more valuable prize due to the jobs and taxes that go with it — as banks and asset managers realize the merits of establishing a dominant hub to concentrate market liquidity and expertise for the trading of securities."

"An increasing number" of financial companies are "fleshing out plans" to move their operations out of the U.K. as Brexit approaches, according to a survey by EY, the accounting firm. "Across Europe, the wheels are in motion on relocation and hiring strategies as firms make their ability to serve clients from day one of Brexit their number one priority," the accounting firm said.

New York Times

Jamie on women in banking
Jamie Dimon talks about opportunities for women at JPMorgan Chase with the Times' deputy managing editor Rebecca Blumenstein.

Here's what some JPM employees have to say.

Quotable

"If you ask most people in the industry, the number one choice is Paris." — The head of a large London-based investment bank about where financial companies plan to move to after Brexit.

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Penalties and fines Blockchain Earnings Brexit Jamie Dimon Renaud Laplanche JPMorgan Chase
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