The CEO of online loan company Lending Club, Renaud Laplanche, abruptly resigned Monday morning in the wake of an internal investigation around a $22m loan that was issued to an investor “in contravention of the investor’s express instructions”, according to a statement from the company.
How exactly the loan contravened the instructions of the borrower was unclear from the statement, but that didn’t stop the price of the company’s stock from plummeting more than 25% when the US stock markets opened.
Scott Sanborn, Lending Club’s president, will continue as interim CEO. The company admitted that the loans had not fallen within the conditions required by the borrower. “Certain personnel apparently were aware that the sale did not meet the investor’s criteria,” the company said.
Lending Club, one of the most high-profile of a new generation of “fintech” companies, has been public for just 18 months. By the end of its first quarter, 31 March 2016, the company was handling $10.2bn in loans serviced. It boasts a who’s who of prominent finance sector names on its board, including former US treasury secretary and president of Harvard Larry Summers, housing-crises era Morgan Stanley CEO John Mack, and former Visa president Hans Morris.
But its trajectory since the IPO has been a steady downhill slope; at Monday’s opening bell on the New York stock exchange it was worth about $2.1bn.
In April 2015, Lending Club announced it would expand to car loans and mortgages.