After internal review, Renaud Laplanche has resigned in major shock to the online lending industry
A large shakeup in the online lending industry has taken place with Renaud Laplanche forced to step down from his role as CEO of Lending Club. Laplanche’s resignation comes after an internal review had found the company had knowingly sold an investor $22 million of loans that the investor expressly stated they did not want. The company’s share price dropped 6% in reaction to the news and is now down 81% from its high of $27.90 in late 2014.
At this stage, regulators are not expected to step in, but it will be up to Lending Club to prove the problem has been dealt with internally and that it is not a systemic issue for the company. Lending Club is the world’s largest marketplace lender and is considered by many investors and analysts to be the industry’s standard-bearer. It was also the first company of its kind to go public.
The resignation comes at a time of instability in the online lending space. Pressure on Lending Club and the industry is rising as investor appetites weaken and the possibilities of defaults begin to increase. Problems at Lending Club also come shortly after the announcement and formation of a trade association for the marketplace lending industry by Funding Circle, Lending Club and Prosper. The association is tasked with developing a business code of conduct.
Renaud Laplanche had an enormous impact on the growth of the lending industry and is now in an awkward position of no longer being the CEO of the company he founded. While the wider significance of the Lending Club fiasco on the lending industry remains unknown, increased scrutiny from investors and regulators is likely.
The company appointed President Scott Sanborn to serve as acting CEO. In a press release prepared by Lending Club, Sanborn stated, “As our first quarter results demonstrate, Lending Club’s business was strong despite the increasingly challenging investor environment,”
He continued saying “I will work closely with our valued borrowers, investors, and business partners to drive the continued success of Lending Club, and I am excited to be leading this exemplary team.”
Hans Morris, the newly named executive chairman, stated, “A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees,”