The emerging Peer to Peer lending industry suffered a major shake-up this week, with Renaud Laplanche’s resignation as CEO of Lending Club. Lending Club’s founder resigned due to a “violation of the company’s business practices along with a lack of full disclosure during the review.”
It is being reported that $22 million in near-prime loans purchased by an institutional investor “failed to conform to the investor’s express instructions” and had altered application dates. Lending Club officials say that Laplanche was aware that the loans did not meet the investor’s requirements.
Lending Club is an online peer to peer online marketplace lending service that allows retail investors to provide funding for consumer loans, including personal loans, small business loans, and loans to finance medical procedures. Lending Club reports that it has funded nearly 1.5 million loans worth over $18 billion to date.
Laplanche’s sudden resignation leaves many unanswered questions. Is there more bad news ahead for Lending Club? What impact will Laplanche’s actions have on regulation of the P2P lending marketplace? How will this situation impact the perception of the industry?
He “led the charge” and was credited with running the P2P lending town, but he “plundered far and wide”. So, have we seen the last of Good King Renauld?
David Greene is a commercial litigation partner in Fox Rothschild’s West Palm Beach office. His practice focuses primarily on banking litigation, real estate litigation, title insurance litigation, and construction litigation. You can reach David at 561-804-4441 or dgreene@foxrothschild.com.