According to the Complaint, Upstart, Inc. is a cloud-based artificial intelligence (“AI”) lending platform. The Company claims that “AI lending enables a superior loan product with improved economics that can be shared between consumers and lenders.” Moreover, Upstart “leverage[s] the power of AI to more accurately quantify the true risk of a loan.” The Company recognizes revenue primarily from fees paid by banks.

The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges Defendants failed to disclose to investors: (1) that Upstart’s AI model could not adequately account for macroeconomic factors such as interest rates that impact the market-clearing price for loans; (2) that, as a result, Upstart was experiencing negative impact on its conversion rate; (3) that, as a result, the Company was reasonably likely to use its balance sheet to fund loans; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.

This case was voluntarily dismissed on July 26, 2022. A related case continues under docket 22-CV-02935 in the Southern District of Ohio.

On August 17, 2022, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed a consolidated Complaint on December 5.

Defendants filed a Motion to Dismiss the consolidated Complaint on February 24, 2023. On September 29, the Court issued an Order granting in part and denying in part Defendants' Motion to Dismiss.