Lending Club Corp (NYSE:LC) is down over 10% on Tuesday, at the price of $3.60 following the company’s disclosure that is received a federal subpoena from the justice department regarding the resignation of founder Renaud Laplanche and an announced board review of disclosure policies since May 9, the first time Lending Club received a grand jury subpoena from the U.S. Department of Justice (DOJ). Such a big drop of Lending Club’s stock also impacted a lot to their investors, which lead to Lending Club lost about a third of its market value. Lending Club could be sued by the CEO Renaud Laplanche failed reported to boards over an internal probe concerning $22 million in improper loan sales.
Scott Sunburn, lending clubs president and acting CEO stated, “Our business depends on trust. The problems identified this quarter run counter to our values and will never be tolerated.” The company also stated they are cooperating with the SEC and Justice Department regarding the investigation. Lending Club officials said they are strengthening their internal regulate to their top executives, and disclosed that three other senior managers involved in the loan sales were fired or had resigned.
Lending Club is a peer-to-peer lending company, headquartered in San Francisco since it found in 2006. Different from other capital investment company, lending club is the first peer-to-peer lender that their capital to invest in the loans comes directly from a range of sources including retail investors, high-net-worth individuals, banks and finance companies, insurance companies, hedge funds, foundations, pension plans and university endowments. Since the company first launched in 2007, Lending Club has successfully facilitated about $18.7 billion in loans.
Regarding Lending Club’s subpoena disclosure this time, Compass Point analyst Michal Tarkean said, “Trust with the board and the leadership is critical,” he continued, “Trust is a core part of their business, especially for a new industry like this.”