LendingClub slumps as CEO resigns after internal review
Shares in LendingClub tumbled in pre-market trade after the peer-to-peer lending company announced the resignation of its chief executive and chairman Renaud Laplanche following an internal review of sales of $22m in near-prime loans to a single investor.
Lendingclub Corporation
$15.12
11:10 14/11/24
The company said this was in contravention of the investor’s express instructions as to a non-credit and non-pricing element, in March and April of this year. LendingClub said certain personnel apparently were aware that the sale did not meet the investor's criteria.
Scott Sanborn will continue in his role of president and will become acting CEO, supported by director Hans Morris, who has assumed the newly-created role of executive chairman.
Morris said: "A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees. While the financial impact of this $22 million in loan sales was minor, a violation of the company's business practices along with a lack of full disclosure during the review was unacceptable to the board.
Accordingly, the board took swift and decisive action, and authorized additional remedial steps to rectify these issues.”
The news came as the company released first-quarter results showing operating revenue rose to $151.3m from $81m the previous year, slightly ahead of consensus estimates of $148m.
Meanwhile, adjusted earnings before interest, taxes, depreciation and amortisation grew to $25.2m from $10.6m in the first quarter of 2015.
"As our first quarter results demonstrate, Lending Club's business was strong despite the increasingly challenging investor environment," said Sanborn.
The company said it had chosen not to provide any forward guidance in light of the findings of the internal review.
Shares were down 27% to $7.09 in pre-market trade.