US p2p lender LendingClub’s share values have plummeted 35%, after co-founder and chief executive Renaud Laplanche resigned following an internal investigation.
In LendingClub’s first quarter results, the lender said: "[Laplanche’s] resignation followed an internal review of sales of $22m (19.3m) in near-prime loans to a single investor, in contravention of the investor’s express instructions as to a non-credit and non-pricing element, in March and April 2016.
"In early April 2016, Lending Club repurchased these loans at par and subsequently resold them at par to another investor. As a result of the repurchase, as of March 31, 2016, these loans were recorded as secured borrowings on the company’s balance sheet and were also recorded at fair value. The financial impact of this reporting is that the Company was unable to recognize approximately $150,000 in revenue as of March 31, 2016, related to gains on sales of these loans.
"The review began with discovery of a change in the application dates for $3m of the loans described above, which was promptly remediated. The board also hired an outside expert firm to review all other loans facilitated in the first quarter of 2016 and the firm did not find changes to data in these or other Q1 loans."
LendingClub said the review also uncovered another matter in relation to the sale of the loans, involving a failure to inform the board’s Risk Committee of personal interests held in a third party fund while LendingClub was contemplating an investment in the same fund, which it said had no impact on its financial results.
LendingClub promised that it would address the weaknesses in its internal controls and financial reporting.