Related Party Transactions

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Related party transactions must be reviewed and approved by the audit committee of the Company’s board of directors when not conducted in the ordinary course of business subject to the standard terms of the Company’s online marketplace or certificate investment program. Related party transactions may include any transaction between entities under common control or with a related person occurring since the beginning of the Company’s latest fiscal year, or any currently proposed transaction involving the Company where the amount involved exceeds $120,000. This review also includes any material amendment or modification to an existing related party transaction. The Company has defined related persons as members of the board of directors, executive officers, principal owners of the Company’s outstanding stock and any immediate family members of each such related persons, as well as any other person or entity with significant influence over the Company’s management or operations.

Several of the Company's executive officers and directors (including immediate family members) have made deposits and withdrawals to their investor accounts and purchased loans, notes and certificates or have investments in private funds managed by LCA. The Company believes all such transactions by related persons were made in the ordinary course of business and were transacted on terms and conditions that were not more favorable than those obtained by similarly situated third-party investors.

At December 31, 2015, Mr. Laplanche, the Company's former CEO and Chairman, and Mr. Mack, a director, owned approximately 2.0% and 10%, respectively, of limited partnership interests in the Investment Fund, a holding company that participates in a family of funds with other unrelated third parties and purchases whole loans and interests in loans from the Company.

During the first quarter of 2016, this family of funds purchased $114.5 million of whole loans and interests in whole loans. During the first quarter of 2016, the Company earned $380 thousand in servicing fees and $15 thousand in management fees from this family of funds, and paid interest of $2.0 million to the family of funds. The Company believes that the sales of whole loans and interests in whole loans, and the servicing and management fees charged were on terms and conditions that were not more favorable than those obtained by other third-party investors.

In the first quarter of 2016, Mr. Laplanche invested an additional $4.0 million to increase his limited partnership interest in the Investment Fund to approximately 8%. On April 1, 2016, the Company closed its $10.0 million investment, for an ownership interest in the Investment Fund of approximately 15%. As of close of business April 1, 2016, the Company, Mr. Laplanche and Mr. Mack owned approximately 15%, 8%, and 8% of limited partnership interests in the Investment Fund, respectively, for an aggregate interest of approximately 31%.