Will sexual harassment claims cost SoFi its FDIC bank charter?


Shortly before the sexual harassment claims at SoFi overtook news headlines, the company filed a bank charter application with the Federal Deposit Insurance Corporation.

The controversy surrounding SoFi right now, though, only increases the likelihood that the company will be denied. The odds of being approved were already slim even before the sexual harassment claims came to light.

SoFi filed the application on June 6 under the name of a Salt Lake City, Utah-based subsidiary called SoFi Bank.

According to an article in the Financial Times by Ben McLannahan, a close adviser and former chairman of the Securities and Exchange Commission said: “SoFi’s application to become a bank has almost no chance of approval in the wake of a sex scandal that forced out its chief executive.”

From the article:

The departure is likely to make the FDIC look askance at SoFi’s efforts to vault itself into the mainstream banking system, said another person familiar with the process. “The FDIC won’t act in a vacuum,” the person said. “For most regulators management is the single most important issue.”

Currently, SoFi focuses on student loans, mortgages and personal loans, along with a handful of other offerings.

One of the newest ventures for SoFi was the bank application. The application came on the heels of SoFi announcing back in February of this year that it acquired Zenbanx, a fintech mobile bank, marking its initial steps into the banking world.

However, with the company still tangled up in a sexual harassment scandal, SoFi’s chances of getting approved are getting pretty low. They were low already since there hasn’t been any new industrial loan company charters approved in about a decade.

The article in the Financial Times noted that sixteen other ILCs are licensed to operate in Utah, including one owned by carmaker BMW.

For more from the Financial Times, click here or below.

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