Lending Platform Upstart Loses Bid to Escape Investors’ AI Suit

Upstart Holdings Inc. investors can proceed with claims that the borrower-lender matching company made misleading statements about its artificial intelligence underwriting model in advance of a pandemic-era downward spiral, a federal court ruled.

But some challenged statements aren’t actionable, and the shareholders failed to state claims against early investor Third Point LLC, which sold all its Upstart stock, Judge Algenon L. Marbley said Sept 29 for the US District Court for the Southern District of Ohio.

Upstart’s business suffered as pandemic stimulus funding ended and interest rates rose in 2021 in response to inflation, “increasing the costs of borrowing and ...