Upstart Holdings Inc. failed to disclose that its artificial intelligence model was unable to adequately account for how rising interest rates negatively affected the market-clearing price for loans, investors allege in federal court in California.
The cloud-based AI-lending platform didn’t tell investors that its model couldn’t “adequately account for macroeconomic factors,” negatively affecting Upstart’s conversion rate and making it reasonably likely the company would need to “use its balance sheet to fund loans,” according to the complaint filed May 13 in the US District Court for the Northern District of California.
An Upstart spokesperson declined to comment Monday, citing a ...