When signing up for FolioFN to buy and sell Lending Club notes (loans) on the secondary market, there is a series of questions that you must answer to be eligible. You must give your social security number, Income, Liquid Net worth, and Net Worth. It is now somewhat like a hedge fund where you must meet certain requirements to participate in the market. Although, the requirements at FolioFN are lower than those of a hedge fund. According to the FAQ, “the current State and Financial Suitability conditions” (the income and net worth requirements) are:
individual lenders who are residents of states other than California must (a) have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000. Individual lenders who are California residents must (a) have an annual gross income of at least $100,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $100,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000.
The prospectus for the Lending Club secondary market can be found on Lending Club’s website.
I have signed up and I am working on a video to show you how easy it is to purchase loans on the secondary market. I’ll post the video when it is available.
Below is the text of the forms that you must go through to become trader in the secondary market.
Before you can resell or trade Notes you must become a trading member.
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you.
Are any owners or minors on this account employed by a stock market, the FINRA, or a firm that is a member of either one? If an owner or minor is only associated with one of these entities, please select “No” below.
No: Yes:Are you a director, 10% or above shareholder, or executive who makes policy at a public company?
Income
Liquid Networth
Net WorthCustomer Agreement
Our customer agreement describes how we will handle your account and trades, and what you agree to do as a customer of FOLIOfn. Please read the agreement carefully.
We draw your attention to the fact that FOLIOfn does not recommend any securities transactions or investment strategies to you based on an assessment of your financial needs, goals, and current financial situation.
Full Name Social Security Number
Under penalties of perjury, I certify that:
The number shown on this form is my correct taxpayer identification number, and
I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
Certification InstructionsYou must uncheck the second box above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest or dividends on your tax return.
The IRS does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.
Electronic SignatureBy typing your name here, you have electronically signed your customer agreement and agree to the following:
“I agree to resolve all disputes through arbitration and not the courts as required on the last page of FOLIOfn’s customer agreement. I agree that FOLIOfn does not recommend any securities or investments to me.”
I agree to the terms and conditions of the Customer Agreement:
Before you agree to opening this account, you must review and accept the Lending Club Member Dependent Notes Trading Platform Disclosures.
You acknowledge the following:
Compliance with Federal and State Securities Laws* The securities services relating to the Trading Platform for Lending Club Member Payment Dependent Notes are provided by FOLIOfn Investments, Inc. (“FOLIOfn”) Although FOLIOfn provides securities services to Lending Club members who also are customers of FOLIOfn, FOLIOfn is not an affiliate of Lending Club and the services provided by FOLIOfn are not sponsored by Lending Club. Lending Club disclaims all liability for the services provided by FOLIOfn and all activities conducted by you on any FOLIOfn website.
* Lending Club is not a registered national securities exchange, securities information processor, broker, dealer or investment adviser.
* All state and federal securities laws (including the anti-fraud and anti-manipulation provisions) apply to any offer made or transaction consummated using the Trading Platform.
* The registration requirements of the federal securities laws apply to all offers and sales through the System, absent an available exemption.
* To the extent that a participant regularly buys and sells Notes on the Trading Platform, he or she may be deemed a “dealer” under the federal securities laws. You should consult counsel if you buy and sell Notes on the system with any degree of regularity.Lending Club Member Payment Dependent Notes
The Notes are highly risky and speculative. Read more.
FOLIOfn makes no recommendation with respect to the Notes offered or sold on the trading platform.
Underlying Borrower Information, Loan Grades, Interest Rates, FICO Scores
Underlying Borrower Information, Loan Grades and Interest RatesFor each Note listed for sale on the Lending Club trading platform Lending Club has provided certain information about the corresponding member loan related to that Note. This information includes the payment history on the corresponding member loan since origination and an updated credit score range for the borrower member. See “FICO Score Range” below. The payment history and updated credit score range do not affect the interest rate or the original loan grading of the Notes listed on the Lending Club Trading Platform.
For trading members’ convenience, Lending Club also provides borrower member’s profile from the original loan listing. Much of this information was supplied by the borrower member prior to the original issuance of the Note and was not verified by Lending Club. It may have been inaccurate or intentionally false at the time it was supplied or it may have become inaccurate with the passage of time. Lending Club has not updated the borrower member information.
FICO Score RangePeriodically, on a 30-day cycle, Lending Club obtains updated information about the credit score of an underlying borrower of a Note and displays an updated credit score range for each borrower member under “Credit Score Trend”. The updated FICO score, however, has no effect on the loan grade or interest rate assigned to an outstanding Note. The loan grade and interest rate are not changed after loan origination.
Offers on the Trading PlatformOffers made on the Trading Platform do not represent “firm quotes.” All prices are determined solely by the seller of a Note. The Trading Platform displays the Notes a seller has offered or desires to sell, and the price at which the proposed transaction would occur. Any offer on the Trading Platform may be withdrawn at any time prior to purchase. FOLIOfn does not assure any seller that any particular transaction will occur; transaction execution is contingent on acceptance of the terms by a buyer on the system.
Participants on the Trading Platform* All participants of the Trading Platform must be lender members of Lending Club.
* Any person that is an associated person of a broker-dealer (or who has a state securities license) is required to identify that fact to FOLIOfn at the time of account opening. In the event that such person becomes associated with a broker-dealer or obtains a state securities license anytime after account opening, such person also must promptly identify that fact to FOLIOfn.Service Charge
The Notes offered and sold on the Trading Platform were initially issued by Lending Club. At the time of issuance, each original Note purchaser designated the proceeds to fund a corresponding member loan originated through the Lending Club Internet-based social lending platform to an individual consumer who is a borrower member.
In addition to issuing Notes, Lending Club services the corresponding member loans on an ongoing basis. Lending Club will continue to service all member loans corresponding to the Notes offered and sold on the Trading Platform. Lending Club will pay to the holder principal and interest on each Note in an amount equal to the Note’s pro rata portion of the principal and interest payments, if any, Lending Club receives on the corresponding member loan, net of Lending Club’s service charge of 1.00%. Lending Club also will pay to the holder any other amounts Lending Club receives on each Note, including late fees and prepayments, subject to the 1.00% service charge, except Lending Club will not pay any unsuccessful payment fees, or collection fees charged by Lending Club or any third-party collection agency. Accordingly, prior to making any payments on the Note you purchase on the Trading Platform, Lending Club will deduct a service charge equal to 1.00% of the payment amount. The service charge will reduce the effective yield on your Notes below their stated interest rate.
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