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Are funds in an IRA secure if Lending Club goes out of business?

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When you invest in a Note, you are investing in an obligation of Lending Club.  Borrowers make payments on their loans to Lending Club, and in turn, Lending Club passes those payments to investors in the Notes.  If Lending Club were to go out of business, investors may not receive the full amount of the payments made by a borrower, or the payments may be delayed as bankruptcy or other proceedings make their way through the courts.  

We have taken steps to ensure continuity to protect investors and borrowers if Lending Club went out of business.  For example, we have executed a backup and successor servicing agreement with Portfolio Financial Servicing Company (“PFSC”).  Under this agreement, PFSC stands ready to service the member loans. Following five business days’ prior written notice from us or from the indenture trustee for the Notes, PFSC will begin servicing the member loans. If the underlying loans are determined to be part of the Lending Club’s bankruptcy estate, PFSC may not be able to make payments on the Notes. If our agreement with PFSC were to be terminated, we would seek to replace PFSC with another backup servicer.  

Read more about the specific risks of investing with Lending Club at: https://www.lendingclub.com/public/risk-of-investing.action.

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Andy

"The interest rate on my loan through Lending Club is a third less than what I was paying before, and it’s very satisfying to know that there is an end date for being done with my debt."