The man tasked with reversing Lending Club’s fortunes is Scott Sanborn, a company mainstay, having served with the group for the past six years – he steps into the interim CEO role with immediate effect, following a snap resignation of the previous incumbent and founder Renaud Laplanche.
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Additionally, the company said it expects Q2 loan originations to be roughly one-third lower than in the March quarter.
LendingClub Corp. said Tuesday that 179 positions will be eliminated as the troubled fintech company works to regain investors confidence.
LendingClub’s board of directors named Scott Sanborn as its new CEO and president.
Ina statement announcing the job cuts, the company says: “In light of lower loan volumes in the second quarter and recognising that fully restoring investor confidence may take time, the company has made a decision to reduce 179 positions in the organisation”. The company said the layoffs were part of a plan to “reduce costs, streamline operations and more closely align staffing with anticipated long-term loan volumes”, indicating the company expects its business to remain slow for a while. All but three of those loans were repaid in full over the next two months, implying they were taken out to artificially goose Lending Club’s loan origination numbers. Lending Club said on Tuesday that it had also uncovered that investment funds managed by a subsidiary of the company did not follow accounting standards when valuing loans.
LendingClub’s stock traded as high as $17.52 over the past 52 weeks, but is now sitting below $5 per share despite a more than 6 percent rally in the stock on Tuesday. It will reimburse its limited partners affected by the adjustments around $800,000.
Lending Club said the goal of those loans, which totaled $722,800, was to lift Lending Club’s total loan volume for 2009’s fourth quarter – in effect, helping the company’s loan volume reach levels expected by industry analysts.
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In early May, the company’s board discovered Mr. Laplanche failed to report errors related to a sale of loans and disclose conflicts of interest. Lending Club said all of the loans were paid back and that it believes neither Laplanche nor his family members took out any more improper loans after December 2009. The company took that action after the Justice Department began an investigation into an improper loan sale of $22 million to an investor. It was originally scheduled for June 7 but LendingClub adjourned it for three weeks to give it more time to review the state of its business.
