Renaud Laplanche, chief executive and chairman of online lender Lending Club, has resigned, the company said Monday.
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Without giving details about the investor’s wishes, Lending Club said the dispute was not related to the credit quality or the price of the loans, which were sold in March and April.
President Scott Sanborn will now serve as acting CEO, the company said, while director Hans Morris assumed the newly created role of executive chairman.
“I was really surprised, because Renaud Laplanche has a very good reputation, he was a figurehead of this industry”, Emmanuel Marot, the founder of LendingRobot, a service that buys up marketplace loans for investors, told BuzzFeed News. Before Monday’s trading session, Lending Club shares had fallen more than 50 percent in the past six months and about 36 percent in 2016.
In a report dated May 10, they highlighted their concerns that LendingClub’s results in the near term will likely be negatively impacted by the damage this week’s announcements is having on the company’s reputation.
The company attributed this slow growth to “more challenging credit market conditions”.
“Certain personnel apparently were aware that the sale did not meet the investor’s criteria”, the company said. Consumers and small business owners borrow through Lending Club.
It said dates had been changed on some of the loans.
LendingClub runs an online marketplace used to connect money lenders with borrowers.
Bad behavior including misleading investors, profiting from both sides of a deal, and undisclosed conflicts of interest have become common scandals on Wall Street.
Jefferies, which planned to bundle LendingClub loans into bonds, wanted the firm to improve its notifications to ensure that loan applicants understood they were handing over rights that could allow the lender to close loan applications faster, potentially by accessing information about customers’ assets and income. The company announced adjusted earnings per share of 5 cents on $151.3 million in revenues while analysts were looking for 5 cents per share on $148 million in revenues.
Lending Club is regarded as a leading light in the peer-to-peer industry and this revelation of wrongdoing could affect trust in the rest of the industry.
While the $22 million of loans in question is small – it had $2.75 billion in loan originations in the quarter ended March 31 – that the sale to one investor violated company policy was enough to end the tenure of Laplanche.
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In an analyst rating update on Monday shares of LendingClub Corporation (NYSE:LC) had their rating reiterated by analysts at FBR Capital.
