IOU Central Suspends Lending Activity in Canada
Only a few weeks after launching their web site, IOU Central shut down their web site on February 29 in response to a request from securities regulators in Quebec. A statement on the IOU Central site states: “IOU Central is now operating with limited functionality while we resolve a regulatory matter.”
However, only a few days later, on March 3, an official statement from the Autorité des Marches Financiers (AMF), the regulatory body that covers securities in Canada, included the following language:
At the request of the Autorité des marchés financiers (AMF), the Bureau de décision et de révision en valeurs mobilières (BDRVM) issued an order on February 27, 2008 against IOU Central Inc. (“IOU”) to cease any activity, directly, indirectly or by Internet, in respect of a transaction in a form of investment governed by the Securities Act (the “Act”), including any activity as a securities dealer. The BDRVM also ordered Philippe Marleau and all directors, officers, employees, representatives and mandataries of IOU to cease any activity in respect of a transaction in securities in a form of investment governed by the Act for and on behalf of IOU, including any activity as a securities dealer.
Microlending.ca has the full details of the Canadian government’s complaint against IOU Central. The complaint focuses on two facts:
- The company falls under the jurisdiction of the AMF but did not register with the AMF, file a prospectus with the AMF, or solicit or receive authorization from the AMF to do business.
- The company’s web site includes many references to “investing”, and “offers no financial guarantee”. These claims seem to subject the site to securities law, which requires AMF authorization.
Colin Henderson, the founder and CEO of the competitor site CommunityLend was quoted by the Toronto Star, saying ”it’s not really a surprise to us”. The regulatory issues that IOU Central has been facing are undoubtedly very familiar to Colin and his team, and explain in large part the continued delay on the launch of CommunityLend.com.
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[...] the flash-in-a-pan P2P lending site from Canada that launched on Feb 13, 2009 and was promptly shut down on Feb 29 by Canadian regulators, has a message on the IOUCentral.com site (which is different than [...]
[...] models. In the world of P2P lending, we have seen Lending Club, Prosper, Boober (NL), Loanio, and IOU Central all close their businesses (or suspend them, at least) due to the action of government regulators. [...]