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  • 05.09.16

Lending Club CEO resigns following internal investigation

Renaud Laplanche, Lending Club chairman and CEO, stepped down last Friday, the online lender announced today. According to an internal investigation, Laplanche had improperly managed $22 million in loan sale agreements in March and April. Three additional senior executives resigned or were fired.  Online lenders like Lending Club offer personal loans to online customers, and … Continue reading “Lending Club CEO resigns following internal investigation”

Renaud Laplanche, Lending Club chairman and CEO, stepped down last Friday, the online lender announced today. According to an internal investigation, Laplanche had improperly managed $22 million in loan sale agreements in March and April. Three additional senior executives resigned or were fired. 

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Online lenders like Lending Club offer personal loans to online customers, and then package and sell those loans to investors. Laplanche oversaw a sale of near-prime loans that did not adhere to criteria set by the institutional investor that purchased them, the board determined. 

Amid the turbulence, Lending Club reported relatively strong first-quarter growth but did not provide guidance. The company originated $2.75 billion in loans this quarter, versus $1.64 billion in Q1 2015, and nearly doubled operating revenue. 

In its early days, Lending Club was the online lending industry’s poster child for success. Laplanche turned his startup into a market leader, and was the first of the fintech companies launched post-recession to IPO. 

But things have not gone as planned since that 2014 public offering. Wall Street isn’t buying Laplanche’s argument that Lending Club should be valued as a technology company, as opposed to a financial services company, and the stock price has been in steady decline. Since a December 2014 high of $25.74, shares have gradually dropped to their current level in the $7-range. (Ouch.) This morning they hit $5.50 after the company announced Laplanche’s departure. 

Lending Club’s 2015 performance has discouraged other financial technology companies from pursuing public offerings, and also had an impact on fundraising overall. 

Peter Renton, chairman of online lending industry conference LendIt, estimates that five or six companies would have IPO’d in the past 12 months, were it not for Lending Club. “Investors are not bought into the story anymore,” he says. “We may not see an IPO this year.”  Plus, he says, many fintech startups raised venture capital rounds with valuations based on Lending Club’s late-2014 multiples–as a result they are loath to raise additional capital, as doing so would signal a down round. 

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Only one thing will lift Lending Club out of the single-digit doldrums, and give the fintech startups in its wake some breathing room: continued rapid growth. Founder Laplanche’s resignation raises additional questions about whether Lending Club will be able to execute at a pace that delivers. 

About the author

Staff writer Ainsley (O'Connell) Harris covers the business of technology with a focus on financial services and education. Follow her on Twitter at @ainsleyoc.

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