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Report: LendingClub CEO failed to disclose stake ahead of company's investment


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Report: LendingClub CEO failed to disclose stake ahead of company's investment

Former LendingClubCorp. CEO Renaud Laplanche pitched the marketplace lender's risk committeeon an investment in Cirrix Capital without disclosing that he already held a personalstake in the company, Bloomberg News reported, citing "people with knowledgeof the situation."

Laplanche, who resignedMay 6 following an internal review, owned a percentage of Cirrix when he proposedthat LendingClub also buy a part of the company. LendingClub's risk committee approvedthe idea, and eventually spent $10 million for a 15% limited-partnership interestin Cirrix, according to the report.

The investment's approval was never presented to the company'sfull board, which meant that board member John Mack's personal interest in Cirrixhad also remained undisclosed. Mack is not on the risk committee and did not knowabout the investment, Bloomberg News reported, and therefore never knew that heneeded to publicize his own stake.

Laplanche owned 2% of Cirrix at the end of 2015. Mack, who isthe former chairman and CEO of MorganStanley, had a 10% limited-partnership ownership of Cirrix at the endof 2015, the news outlet said. He plans to remain on LendingClub's board, Bloombergnoted.

LendingClub in its first-quarter earnings report announced thatLaplanche resigned following an internal investigation into the sale of $22 millionof loans to an investor that Bloomberg later reported to be Jefferies Group LLC. The loans did not meet Jefferies' purchasecriteria, in a violation of LendingClub's business practices. Sourcesalso told the news outlet that the enforcement unit of the SEC is reviewing thecompany.

Cirrix is an entity managed by Arcadia Funds LLC, the news publication added.

Bloomberg said Laplanche did not respond to requests for comment.

LendingClub shares fell 34.93% on May 9 to close at $4.62.