Lending Club CEO resigns after internal probe, shares plummet
By Michael Erman and Joy Wiltermuth
(Reuters/IFR) - Renaud Laplanche, founder and chief executive of online lender Lending Club Corp, resigned after an internal probe found that the company had knowingly sold an investor $22 million of loans that the investor did not want, the company said on Monday.
Lending Club is by far the largest of the so-called marketplace lenders, which sell their consumer and small business loans on to investors, and it is considered by many investors and analysts to be the industry's standard bearer.
The resignation adds to pressure on an industry already smarting from weakening investor appetite for its loans, increasing defaults and the possibility of heightened regulation.
Lending Club's shares closed down 35 percent at $4.62 on Monday, leaving the company with a market capitalization of around $1.8 billion, about a fifth of its value when the company went public in December 2014.
"This development will surely spook bank purchasers who have become an increasing part of the company’s funding base, further frustrate the investment community, and ultimately result in stricter scrutiny from both federal and state regulators," said Isaac Boltansky, analyst at Compass Point research.
Laplanche, a French entrepreneur who says he came up with the idea for Lending Club while reading his credit card statements while on vacation in 2006, is one of the highest-profile names in the nascent online lending industry.
"This is the godfather of the industry," said Peter Renton, who runs LendIt, a company that organizes online lending conferences. "It's hard to overstate how important he has been and his departure is going to be felt terribly."
Lending Club named President Scott Sanborn interim CEO and director Hans Morris executive chairman. Continued...