Recently, loanDepot (NYSE:LDI) was hit with a lawsuit by a former executive that alleges fraudulent activity at the online mortgage lender.
In a filing dated September 21, 2021, Tammy Richards alleged that loanDepot allowed an environment that enabled sexual harassment and gender discrimination. Additionally, Richards alleged that the company engaged in “fraud for profit schemes” and closing loans without complete documentation – allowed by founding CEO Tony Hsieh. Richards resigned from the company in March 2021 after losing her position as Chief Operating Officer and being relegated to the Chief Mortgage Officer role.
The entire saga was picked up by the NYTimes that drew a parallel to the 2008 crisis that was the genesis for the great recession. Of course, there have been no reports of excessive fraudulent activities by other loan originators nor reports of excessive defaults by loanDepot or other financial services firms.
According to a report in National Mortgage Professional, loanDepot has stated that “the claims in the lawsuit, which we take very seriously, were previously thoroughly investigated by independent third parties and found to be without merit. We intend to defend ourselves vigorously against these outlandish allegations.”
loanDepot has said it will vigorously defend itself against the allegations.
All of this has taken place during the backdrop of a pending and then completed, initial public offering that occurred this past February. Priced at $14 a share, the company later saw its shares soar in value. At one point shares in loanDepot traded at $39 each.
Today, loanDepot is hovering around $6.50 a share – a steep drop in value, aided in part, by the lawsuit.
As is frequently the case, a good number of follow-on lawsuits have been filed targeting shareholders that have seen the value of their holdings decline.
loanDepot stands today remains one the most successful mortgage originators in the country.