Lending Club names Scott Sanborn as new CEO

Steven Loeb · June 28, 2016 · Short URL: https://vator.tv/n/4644

The company has cut 179 jobs, and put new rules in place to restore investor confidence

Peer-to-Peer lending company Lending Club, once the most successful company in its space, was rocked last month when founding CEO Renaud Laplanche was forced out following a probe into suspect loan sales. While the company is attempting to move on from what happened, by hiring a new CEO and putting rules in place to reassure investors, there's still going to be a lot of pain along the way to getting the company back on top.

On Monday, the company announced that it is installing Scott Sanborn as Lending Club's new CEO and President.

Sanborn has worked at the company for the past six years, having previously been its President, Chief Marketing Officer and Chief Operations Officer. He had been Lending Club's interim CEO since Laplanche's resignation in May. 

Before joining Lending Club, Scott had been the Chief Marketing and Revenue Officer for eHealth Insurance, President of RedEnvelope, and Senior Vice President of Marketing for the Home Shopping Network.

In addition, it was also revealed that Hans Morris has been named Chairman of the Board of Directors at Lending Club, after having being given the temporary role of Executive Chairman.

Getting Lending Club back on track

Laplanche was forced to resign in May, following an internal review of sales of $22 million in near-prime loans that had been made to a single investor, and which had failed to conform to the investor's express instructions as to a non-credit and non-pricing element. In addition, Laplanche also got himself into hot water after it was discovered that he hadn't disclosed a personal investment in another third party fund that Lending Club had been considering investing in. 

Going forward, a big part of Sanborn's work in getting Lending Club back on track means regulating the company in order to reassure investors that what happened with Laplanche won't happen again.

To that end, Lending Club revealed that it has conducted its own internal review, leading it to adjust the valuation of assets held by six private funds managed by LC Advisors "that were not consistent with generally accepted accounting principles and impacted net asset values and monthly return figures for the LCA funds."

It is also updating its controls, compliance and governance by increasing testing of data changes, increasing compliance and oversight resources, aligning business and control functions into a better risk management structure, and retraining employees on code of conduct and ethics and reinforcing the importance of a high compliance culture.

In addition, Lending Club's Board has established new policies prohibiting pledging of Lending Club shares, and prohibiting the company from making investments in ecosystem partners that invest in Lending Club loans.

"We have demonstrated the power of the Lending Club marketplace model to generate attractive, risk adjusted returns to investors," Sanborn said in a statement. "We are working closely with investors to rebuild confidence and are encouraged to see them returning to the platform."

Pain along the way

While rebuilding company culture, and putting rules in place to reassure investors, are necessary steps to restoring Lending Club's name, it will take a while for that process to take place. In the meantime, the company still has to deal with the fallout of the scandal, and how it has affected its business.

The company is tamping down expectations for its quarterly results. In the first quarter, the company saw 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. 

However, in Q2, it expects loan originations to be only a third of what they were in Q1. 

That's why Lending Club has decided to cut 179 members of its staff, "in light of lower loan volumes in the second quarter and recognizing that fully restoring investor confidence may take time.”

Investors are at least reacting positively to all of this news, sending Lending Club's stock up 3.72 percent, to $4.46 a share. That is still down over 30 percent from the $7.1 a share it was trading at before Laplanche's resignation.

(Image source: crowdfundinsider.com)

Read more from our "Trends and news" series

More episodes

Related Companies, Investors, and Entrepreneurs

Lending Club


Joined Vator on

Lending Club is a social lending network where members can borrow and lend money among themselves at better rates.

Lending Club provides a much improved infrastructure for social lending: state-of-the-art technology to authenticate all users (ensuring making sure they are who they say they are); credit scoring systems which rate borrower risk; and, the automated clearing house (ACH) system to move the funds between both parties. In addition, we provide our LendingMatch™ system to minimize risk and allow community based lending.



Renaud Laplanche

Joined Vator on

Co-founder, CEO Lending Club

Related News