Qudian, Inc. (QD) Accused of Engaging in Predatory Lending Practices

On October 18, 2017, Qudian, Inc. (NYSE: QD) held its IPO, selling 37.5 million American Depositary Shares and raising net proceeds of approximately $900 million. The complaint alleges that Qudian's registration statement represented that the company had experienced rapid growth in revenues, net income, and active users in the years leading up to the IPO. Qudian further assured investors that it employed robust credit assessment and monitoring tools to ensure that it was only making loans to borrowers who demonstrated the ability and willingness to repay the loans. However, Qudian failed to disclose that its financial position had been fueled by improper lending, underwriting, and collection practices. In particular, Qudian was engaging in predatory lending practices that saddled subprime borrowers with high interest rate debt that they could not repay, failed to implement necessary safeguards to protect customer data, and subjected the company to undisclosed risks of penalties and financial and reputational harm. On December 12, 2017, Qudian's ADR price fell 45% below its $24.00 IPO price to close at $13.19.

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