Lawsuit Against LoanDepot Helps Increase Number of Class Action Cases
Recently, loan deposit (NYSE: LDI) was the subject of a lawsuit brought by a former executive who alleges fraudulent activity at the online mortgage lender.
In a file dated September 21, 2021, Tammy richards alleged that LoanDepot enabled an environment that allowed for sexual harassment and gender discrimination. Further, Richards alleged the company engaged in “for-profit fraud schemes” and entered into loans without full documentation – authorized by founding CEO Tony Hsieh. Richards resigned from the company in March 2021 after losing his position as chief operating officer and being relegated to the post of chief mortgage officer.
The whole saga was picked up by the NYTimes which drew a parallel with the 2008 crisis which was the genesis of the great recession. Of course, there have been no reports of excessive fraudulent activity by other loan originators or reports of excessive defaults by LoanDepot or other financial services companies.
According to a report published in National Mortgage Professional, LoanDepot said that “the claims in the lawsuit, which we take very seriously, have already been thoroughly investigated by independent third parties and have been found to be without merit. We intend to vigorously defend ourselves against these far-fetched allegations.
LoanDepot said it will vigorously defend itself against the allegations.
This all happened in the context of a pending and subsequently completed initial public offering that took place last February. Priced at $ 14 a share, the company then saw its shares skyrocket. At one point, LoanDepot shares were trading at $ 39 each.
Today, LoanDepot is hovering around $ 6.50 a share – a steep drop in value, helped in part by the lawsuit.
As is often the case, many lawsuits have been filed against shareholders who have seen the value of their holdings decline.
LoanDepot remains one of the most successful mortgage originators in the country today.