Lending Club shares crater over 25% after CEO is forced out

Renaud Laplanche resigned after a probe into loans sales; President Scott Sanborn named interim CEO

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CEOs come and go all the time; we've actually seen quite a bit of turnover this year already in that department, in some pretty big companies. It seems a little rare, though, that a well-known, founding CEO of a public company is forced out in a scandal. Yet that's exactly what just happened at Lending Club.

On the same day that the company released its first quarter earnings, Lending Club also revealed that Renaud Laplanche, who has been in charge of the company since it was founded in 2006, has resigned, following an internal review of sales of $22 million in near-prime loans that had been made to a single investor.

"The loans in question failed to conform to the investor's express instructions as to a non-credit and non-pricing element. Certain personnel apparently were aware that the sale did not meet the investor's criteria," the company said in the press release. 

In addition, Laplanche also got himself into hot water after it was discover that hadn't disclosed a personal investment in another third party fund that Lending Club had been considering investing in. 

Lending Club President Scott Sanborn will take over as interim CEO, while board director Hans Morris has been named Executive Chairman.

"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," Morris said in a statement. 

"We have every confidence that Scott and the management team are well positioned to lead Lending Club forward."

Going forward, Lending Club said that it will take "remediation steps to resolve the material weaknesses in internal control over financial reporting." That included the firing of three senior managers involved in the sales of the loan.

All of this has hit Lending Club's stock hard. It is currently down 26.76 percent to $5.20 a share in regular trading on Monday. 

The bad news has completely overshadowed the fact that the company had a better than expected first quarter, with revenue of $151.3 million, an increase of 87 percent year-over-year, and higher than the $148.2 million that Wall Street had been expecting. It reported EPS of $0.01, lower than the expected $0.05. 

CEO turnover in 2016

As I mentioned earlier, there has been a lot of CEO turnover this year so far, and it isn't even half over/ 

Mobile messaging app Tango announced that it was replacing its longtime CEO Uri Raz with co-foundr and CTO Eric Setton. After that, Indian e-commerce company Flipkart revealed that Binny Bansal, its COO and Co-founder of Flipkart, will become its Chief Executive Officer. 

Digital sports blog Bleacher Report also got a new CEO in Dave Finocchio, who had previously been in charge of the company in 2013, before stepping back from day-to-day responsibilities in 2014.

Slava Rubin, founder and CEO of Indiegogo, also let go of his position, becoming the company's Chief Business Officer instead.

Rovio CEO Pekka Rantala decided to step down after he took over the job from long-time CEO Mikael Hed in August of last year. Rantala will stay on as CEO until the end of the year before being replaced by Kati Levoranta, who has been Chief Legal Officer at Rovio since 2012.

Zenefits that lost its CEO when Parker Conrad resigned from his position following months of bad press, and possible scandals. He was replaced by Yammer founder David Sacks. 

In March, Zynga replaced Mark Pincus for the second time, bringing on Electronic Arts executive Frank. Pincus became Executive Chairman of the company's Board of Directors.

Priceline CEO Darren Huston regisned in April, after it was revealed that he had an affair with an employees.

Most recently, Doctor on Demand CEO Adam Jackson announced last week that he was stepping down, with Hill Ferguson, a former PayPal executive, taking over. 

VatorNews reached out to Laplanche for comment on the news. We will update this story if we learn more. 

(Image source: lexpansion.lexpress.fr)