Lending Club Corp. (NYSE: LC) has been watching its shares take the long way down following the resignation of its CEO and founder, Renaud Laplanche. However, that was only the beginning of Lending Club’s problems because the U.S. Securities and Exchange Commission (SEC) and the U.S. Justice Department are now taking a closer look at the company.
Robert Laplanche resigned on May 9, after internal reviews. The board of directors mentioned two incidents when the firm’s staff changed the application dates on $3 million worth of loans before their sale, as well as Laplanche failing to disclose his interests in a fund that the company was considering investing in.
Scott Sanborn will continue in his role of president and will become acting chief executive officer, assuming additional managerial responsibilities for the company. Sanborn will be supported by director Hans Morris, who has assumed the newly created role of executive chairman.
Morris commented:
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. We have every confidence that Scott and the management team are well positioned to lead Lending Club forward.
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So far in 2016, Lending club has vastly underperformed the broad markets, with the stock down 64% (prior to Tuesday’s move). Over the past 52 weeks, the stock is down 77%.
Shares of Lending Club were trading down 10.5% at $3.52, with a consensus analyst price target of $8.77 and a 52-week trading range of $3.44 to $19.48.
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