Weidai, a Chinese Peer to Peer Lender Listed on the NYSE, Said to be Under Investigation by Police

China’s crackdown of the peer to peer lending industry appears to be ongoing with a report today that Weidai, (NYSE:WEI) a P2P platform that raised $45 million in an initial public offering (IPO) on the New York Stock Exchange, is said to be under investigation.

China was once home to the most robust P2P lending sector in the world. The sector boomed and catapulted the Chinese Fintech industry into the largest anywhere. But government authorities soured on the industry due to rampant fraud and spurious activities compelling many lenders to pivot into other sectors of finance. Around 5000 P2P lending platforms have exited the sector since the regulatory crackdown.

According to a report in ChinaDaily, Weidai has been accused of “illegally collecting savings.”

Weidai has operated in the auto-financing sector. In 2019, the company announced that it is working on applying for an online microcredit company license in China, in an effort to further diversify its business as it attempted to manage a transition.

Last month, Weidai filed its annual report with the Securities and Exchange Commission. The company admitted that:

“recently-issued laws and regulations have imposed additional requirements and restrictions on the operations of marketplace lending platforms, which have adversely affected our business operations in 2018 and 2019. These regulatory requirements and restrictions may continue to adversely affect our business and results of operations in the future.”

As well:

“The stringent regulatory actions on online lending information intermediaries have decimated online lending information intermediary service, including well-known listed companies such as Yiren Digital (NYSE: YRD) and China Rapid Finance (NYSE: XRF). As of December 31, 2019, more than 10 provincial government agencies or internet financing associations had announced their plans to exit online lending information intermediary business in their jurisdictions, among which provincial government agencies in Yunnan, Hebei, Sichuan, Chongqing, Henan, Shandong and Hunan have explicitly announced to clamp down all online lending information intermediary businesses.”

Weidai ceased to offer new loans to investors last February and completely exited P2P lending last month.

According to the same aforementioned report, as of March 2020, there were only 139 P2P lenders remaining in China.

Shares in Weidai are currently trading around $1.30. At one point, shares traded over $13/share.

Sponsored Links by DQ Promote



Send this to a friend