P2P lender TrustBuddy shuts up shop over financial irregularities

TrustBuddy, one of the few publicly-traded peer-to-peer lending operations in Europe has shut down, after discovering a £3.5 million discrepancy.

The Stockholm-based lender, which was midway through a rights issue on the Nasdaq OMX exchange, has suspended operations and informed the Swedish FSA after a new management team uncovered "serious misconduct" within the company.

In a statement, the firm says an investigation into the company's finances revealed that it had been using lenders’ capital "in violation of their instructions, or, without their permission". As a result, there is currently a 44 MSEK discrepancy between the amount owed to lenders and the available balance of the client bank accounts.

Simon Nathanson, chairman of the Board of TrustBuddy, comments: "We are of course very disappointed in the situation that has arisen. With the new management team in place, TrustBuddy had both the platform and the capacity to create a company built for growth and industry leadership. In light of the recent events, we now have to redirect our focus to find a solution that is in the best interest for all stakeholders."

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Comments: (5)

Clive Munn - MFTSE Affairs S.A. - Luxembourg 16 October, 2015, 11:01

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Oh dear is this what happens when there is no proper regulation and external audit? How did this escape the auditors and due diligence. Bad mistakes like this could destroy the market. MFTSE Affairs S.A.

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 October, 2015, 12:32

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J&J-Tylenol. VW-Emission Scandal. Satyam-Fraud. When such a thing happens in large companies, they wake up and work harder to fix the problem. Why is it that this company shuts down at this point?

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Clive Munn - MFTSE Affairs S.A. - Luxembourg 16 October, 2015, 12:49

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It seem the new ownres could not handle the reputational risk let alone the losses!

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Jan-Olof Brunila - Swedbank - Stockholm 19 October, 2015, 12:57

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The Swedish FSA pulled their operating license and thus it was not possible to operate even if they would have had the 5 million USD in cash. The company filed for bankrupcy today. Also using customer deposits on the trustee accounts for their own beenfit in violation with the agreement means that the customer trust is gone and it may be a hard time to win it back.