26 executives associated with Ezubao were on trial this week in China; the fraud case included Anhui Yucheng and Yucheng Global, operators of the online platform, along with other company executives and platform employees; Ezubao has reportedly taken in over 50 billion yuan ($7.3 billion) in fraudulent investments through two platforms Ezubao and Sesame Financial; a final result in the case has not yet been announced. Source
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Originators are beginning to look at launching their own captive funds; at LendIt USA 2017 we hosted a panel featuring Cross River Bank, Freedom Financial, Money360, Credibly, UBS and Clifford Chance to discuss this idea; the originators on the panel talked about their current funds, if they have launched one, size, structure and how they currently view the idea of this vehicle in the long term; the panelists focused on diversification of funding sources; in good times it is never hard to get loan purchasers but when markets tighten how can you make sure you are prepared; they also talked about when setting up this funding vehicle should you manage it yourself or should you find a third party fund manager; how do conflicts of interest come into play when the originating company is then investing in the loan and servicing the loan; there are still many questions when it comes to setting up a fund like this, as more firms look to this option we will better understand how to answer these questions in the future. Source