We previously reported on Social Finance, Inc.’s application for an industrial loan company (ILC) charter. That is now over, at least for the time being. On Friday, October 13, the online lender announced it is withdrawing its application in the wake of several senior executives departing the company, including co-founder and former CEO Mike Cagney.
The departures are occurring amid ongoing investigations into alleged sexual harassment at the company, as well as lawsuits filed by two former employees. Cagney’s exodus, in turn, does not bode well for SoFi’s charter application, since one of the things regulators will assess before allowing SoFi to accept deposits is whether the company has a capable CEO.
Given the complications surrounding the leadership transition, SoFi spokesman Jim Prosser issued a statement that the company is withdrawing its application with the FDIC “for now.” Prosser clarified that the company was not abandoning its plans for a charter, stating it “remains an attractive option” the company may pursue “when the time is right.” But for now, the application has been withdrawn, and Prosser said the company’s top priority will be its search for a new CEO.
Even without a charter, SoFi can still make good on its plan to provide customers with deposit accounts. It will just have to do so through partner banks. SoFi remains one of the most valuable private Fintech startups in the United States..