THE REGULATION OF
MARKETPLACE LENDING:
A Summary of the Principal Issues
March 2017 Update
Peter Manbeck
Marc Franson
Lindsay Henry*
This document has been prepared by Chapman and Cutler LLP attorneys for information purposes only.It is
general in nature and based on authorities that are subject to change.It is not intended as legal advice.
Accordingly, readers should consult with, and seek the advice of, their own counsel with respect to any individual
situation that involves the material contained in this document, the application of such material to their specific
circumstances, or any questions relating to their own affairs that may be raised by such material.The publication
and receipt of this document do not constitute legal advice or establish an attorney-client relationship with any
person.Attorney advertising material.
2017 Chapman and Cutler LLP
* The authors acknowledge with thanks the contributions of other Chapman and Cutler attorneys to the preparation of this
survey, including Colman Burke, Walt Draney, Heather Hansche, Dianne Rist, and Sara Ghadiri.
Table of Contents
SECTIONPAGE
Preface ......... i
Recent Developments .......1
A.
Madden v. Midland Funding, LLC
1
B. ”True Lender” Litigation 4
C. OCC Proposes Special-Purpose Charter for Fintech Firms ...9
D. Regulatory Promulgations ........10
E. CFPB Expanded Oversight of Small Business Lending .......16
F. CFPB Status: The
PHH
Case and the Future of Arbitration 17
G. TCPA Developments .....19
H. Impact of Supreme Court’s Standing Ruling in
Spokeo
........22
I. State Developments .......23
J. Enforcement and Court Actions ..........25
K. Investment Company Investments in Marketplace Loans ..25
L. SEC Comments on the Status of Marketplace Loans as “Securities” .........29
Background ..........31
Regulatory Issues 35
A. Securities Laws ...35
1. Securities Act ......35
2. The Private Placement Rules ...39
3. Regulation A+ ....42
4. Blue Sky Laws ....44
5. Secondary Trading ........46
6. Securities Exchange Act ...........50
7. Investment Company Act ........51
8. Investment Advisers Act ..........53
9. Risk Retention Requirements ..55
10. Securitization .....58
B. Lending Laws and Lender Registration/Licensing ..63
1. Usury Laws ........64
2. Issues Related to the Third-Party Use of Bank Charters .....66
3. State Licensing Requirements .68
C. Consumer Protection Laws ......72
1. Truth in Lending Act ....72
2. FTC Act, UDAP Laws, and the CFPB’s UDAAP Authority ...........73
3. Fair Lending and Other Laws .75 。