stock lost abouta quarter of its value in early trading May 9, after the marketplace lender'sCEO resignedfollowing an internal investigation into certain loan sales.
Thecompany said in its first-quarter earnings report that it discovered $22million of sales in near-prime loans to a single investor that violated its businesspractices and the investor's instructions. The activity was not fullydisclosed, prompting an internal review, newly appointed Executive ChairmanHans Morris said. Thereview also led to the discovery of another instance where certain personal interestsheld in a third-party fund were not disclosed as LendingClub was considering aninvestment in the same fund.
Thecompany declared a material weakness in internal control over financialreporting, and Chairman and CEO Renaud Laplanche has resigned.
LendingClubshares fell 25.12% to $5.32 as of 10:28 a.m. ET on very heavy volume.
ScottSanborn is now the marketplace lender's acting CEO, in addition to retaininghis role as president.