LendingClub Corp. founder and Chief Executive Officer Renaud Laplanche resigned after an internal review of loan sales to a single investor, and president Scott Sanborn was named acting CEO.
"A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees," Hans Morris, the newly named executive chairman, said in a statement Monday. The sale of $22 million in near-prime loans was found to be "in contravention of the investor's express instructions," the San Francisco-based company said in the statement.
LendingClub matches borrowers with investors willing to finance their loans over the Internet. The company has faced a series of setbacks, and the stock has slumped 36 percent this year through Friday. It declined 23 percent to $5.50 at 7:15 a.m. in New York after the executive changes were announced. The company said it won't be providing guidance as it seeks to resolve material weaknesses in internal controls.
"These remediation steps included the termination or resignation of three senior managers involved in the sales of the $22 million of near-prime loans," LendingClub said.
LendingClub and its competitors have faced risks from lawsuits and tightened scrutiny from regulators in Washington. Laplanche's firm went public in 2014, leading a revolution of financial-technology firms that investors hoped would modernize lending, as large banking rivals faced regulatory pressures after the 2008 financial crisis.
LendingClub also reported first-quarter results on Monday. The company posted net income of $4.1 million, or 1 cent a share, compared with a loss of $6.4 million, or two cents, a year earlier. The company had previously said that results would be released after the close of regular trading Monday.