New York (AFP) - Pioneer online loan broker Lending Club announced Monday that chief executive Renaud Laplanche resigned after a review showed loans were sold to an investor that did not meet the investor's criteria.
Lending Club, one of the innovators in online finance, said the loans, worth $22 million, were sold to the institutional investor in March and April.
It said the application dates on some of the loans had been altered
On top of that, the company suggested in a statement that there had been some resistance inside the company to the investigation of the issue.
"A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees," said Hans Morris, Lending Club executive chairman.
"While the financial impact of this $22 million in loan sales was minor, a violation of the company's business practices along with a lack of full disclosure during the review was unacceptable to the board."
Company President Scott Sanborn was named as acting chief executive, responsible for day-to-day management.
Lending Club shares plunged 25.1 percent in early trade to $5.32. That was also far below their December 2014 IPO price of $15.00.
The statement said the loans sold to the investor contravened the investor's "express instructions as to a non-credit and non-pricing element."
It said dates had been changed on some of the loans.
"Certain personnel apparently were aware that the sale did not meet the investor's criteria," the company said.
Lending Club repurchased the loans and subsequently sold them to another investor, resulting in a $150,000 hit to revenues.
The company said its recent internal review had discovered a separate problem in which the board was not informed by an unnamed person of his or her holdings in another company Lending Club was considering investing in.