Author Topic: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse  (Read 66896 times)

AnilG

  • Hero Member
  • *****
  • Posts: 1122
    • View Profile
    • PeerCube
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #180 on: May 15, 2016, 10:03:22 PM »
Another interesting article about the factors that may lead to demise of Lending Club.

Will LendingClub Survive as a MarketPlace Lender?
https://www.linkedin.com/pulse/lendingclub-survive-marketplace-lender-mark-wilcox
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

TheReaper

  • Newbie
  • *
  • Posts: 23
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #181 on: May 16, 2016, 05:56:01 AM »
This whole affair to date, has been a classic case of the silence being deafening. I would suspect Sanborn and the board know this, and will make some sort of announcement this week.  Not to do so, would be downright moronic.  They need to say something....anything.  I can understand their silence last week, but it can't go on for much longer........

mchu168

  • Full Member
  • ***
  • Posts: 147
  • “Integrity is the ability to stand by an idea.”
    • View Profile
    • Email
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #182 on: May 16, 2016, 10:32:04 AM »

Agree with your sentiment. The only thing that gives me peace of mind is that Lending Club is still sitting on a huge net cash balance. Even assuming revenue goes to ZERO, which would never happen, they could survive for at least another year on their cash balance.

I still can't get over how ridiculous this whole affair is. RL must be either the stupidest or greediest man alive to throw away the whole company like this. The board has also greatly mishandled the situation. I had a lot of reservations about LC but to see this happen is an absolute shame.  :-\

My take is that RL had fun creating the company but would rather sail and enjoy his vast amounts of personal wealth than deal with the day to day operations of the company and a BoD breathing down his back.  Can't say I blame him. The mistake he made was not leaving earlier just before the IPO when he was sitting at the top of the P2P world.
« Last Edit: May 16, 2016, 10:33:56 AM by mchu168 »

nonattender

  • Hero Member
  • *****
  • Posts: 726
  • I am not here.
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #183 on: May 16, 2016, 10:38:53 AM »
I still can't get over how ridiculous this whole affair is. RL must be either the stupidest or greediest man alive to throw away the whole company like this. The board has also greatly mishandled the situation. I had a lot of reservations about LC but to see this happen is an absolute shame.  :-\

My take is that RL had fun creating the company but would rather sail and enjoy his vast amounts of personal wealth than deal with the day to day operations of the company and a BoD breathing down his back.  Can't say I blame him. The mistake he made was not leaving earlier just before the IPO when he was sitting at the top of the P2P world.

If I'm paranoid for running through a full suite of possible conflict/fraud/self-dealing scenarios due to the weak controls that've been exposed, you're now - with the "he just wanted to retire and enjoy going sailing" bit - whatever the opposite of "paranoid" may be.  My paranoia at least yields the fruit of exposing dark areas which will need examination and more disclosure;  not sure what you're accomplishing.
« Last Edit: May 16, 2016, 10:53:07 AM by nonattender »
A little nonsense now and then is relished by the wisest men.

mchu168

  • Full Member
  • ***
  • Posts: 147
  • “Integrity is the ability to stand by an idea.”
    • View Profile
    • Email
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #184 on: May 16, 2016, 01:13:18 PM »
If I'm paranoid for running through a full suite of possible conflict/fraud/self-dealing scenarios due to the weak controls that've been exposed, you're now - with the "he just wanted to retire and enjoy going sailing" bit - whatever the opposite of "paranoid" may be.  My paranoia at least yields the fruit of exposing dark areas which will need examination and more disclosure;  not sure what you're accomplishing.

I'm trying to rationalize the news in the best way that I can and not succumb to panic and hysteria. A more thorough review of recent events may come to pass, or this whole thing may blow over in a quarter or two.  Based on what I've seen thus far, I'm betting on the latter.

BruiserB

  • Sr. Member
  • ****
  • Posts: 425
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #185 on: May 16, 2016, 01:37:58 PM »
Should we be worried that we haven't seen the promised 10Q yet?  Or is that something that would most likely be released after market close in any case?  Hopefully it will come out as promised and then management will start opening up with some updates on what they know.  I'm still sitting on my IPO LC shares and figure they will never be worth what I paid....I just hope things don't get any worse.

Boatguy

  • Jr. Member
  • **
  • Posts: 77
    • View Profile
    • Email
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #186 on: May 16, 2016, 06:33:44 PM »
It would take us 3-5yrs to fully unwind our positions in LC so patience seems warranted.  I've been investing and buying loans in LC for 8yrs so I'm past worrying that it's a Ponzi scheme.

They have a lot of cash on hand which means they can lose money for quite awhile.  In fact if I was Sanborn, I'd tell the investors he's building for the future and to expect losses for the next two years; the Amazon approach.  Sanborn has a very rich and unique opportunity here to do things the RL perhaps was incapable of doing.  He's been handed a well funded "turn around" which is not usually the case.

LC can return to the original pitch and build the retail investor base with new products and new approaches.  Profits won't be as rich, but they wont' be living at the whim of institutional investors.

bobeubanks

  • Sr. Member
  • ****
  • Posts: 273
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #187 on: May 16, 2016, 06:41:45 PM »

My take is that RL had fun creating the company but would rather sail and enjoy his vast amounts of personal wealth than deal

So instead of quitting to sail, he went through the trouble to commit fraud and get fired? What a genius he must be.

mchu168

  • Full Member
  • ***
  • Posts: 147
  • “Integrity is the ability to stand by an idea.”
    • View Profile
    • Email
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #188 on: May 16, 2016, 06:48:50 PM »
So instead of quitting to sail, he went through the trouble to commit fraud and get fired? What a genius he must be.

Bingo and good riddance to him.  After reading through the 10Q, it's clear that RL was running a loose ship.  This mess is going to take a bit longer to clean up...

Fred93

  • Hero Member
  • *****
  • Posts: 2245
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #189 on: May 17, 2016, 03:38:47 AM »
Nice Bloomberg article.  WSJ & Bloomberg reporters are good at finding employees who will talk.
http://www.bloomberg.com/news/articles/2016-05-17/inside-lendingclub-s-shakeup-ceo-s-exit-said-to-hang-on-trust

Quote
But tensions simmered inside LendingClub in recent months as turbulence in capital markets prompted investors to pull back from buying Internet loans, according to a person familiar with the matter. As funding got tighter, Laplanche pushed for a strategy that would maintain growth, this person said. Other managers including now-acting CEO Scott Sanborn argued that the company should consider the potential impact on profit from concessions it was offering investors, the person said.

Concessions?  I didn't get any concessions.  Guess I gotta change my middle name to "Bank".

The 10Q does say
Quote
We are actively exploring ways to restore investor confidence in our platform and obtain additional investment capital for the platform loans. These efforts may take a number of different structures and terms; including equity or debt transactions, alternative fee arrangements or other inducements including equity.

An "alternative fee arrangement" might be a "concession".  Maybe they lowered somebody's fee?  But this is all future tense.  Maybe the article meant that RL pushed  for concessions, but they hadn't actually done any yet?

Hey, long time customer here.  You could reduce my fee.  I would accept that.
« Last Edit: May 17, 2016, 03:50:10 AM by Fred93 »

twigster

  • Jr. Member
  • **
  • Posts: 95
    • View Profile
    • Email
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #190 on: May 17, 2016, 09:21:10 AM »
Quote
Concessions?  I didn't get any concessions.
Maybe they are talking about the $2,000 bonus for new IRA investments..... I remember at the time thinking that was sounding a bit desperate.... before all this blew up!    ::)

investny

  • Jr. Member
  • **
  • Posts: 90
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #191 on: May 17, 2016, 01:54:25 PM »
Company is considering new ways to draw funding for its loans

Investors who “contributed a significant amount of funding” for loans have paused purchases to examine their performance “or are otherwise reluctant to invest,” San Francisco-based LendingClub said, adding that the retreat is hurting its ability to field new loan applications.

Higher interest rates might be needed to bring back investors, “which may serve to erode the company’s margins in the near term but may be necessary to get the company back on track,” BTIG analysts including Mark Palmer and Giuliano Bologna wrote in a note to clients. Management has to re-instill confidence in LendingClub’s platform “while the company contends with a legal overhang,” they wrote.

Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million of restricted stock units and her salary was increased to $400,000. Both executives also received $500,000 cash awards that will pay out in a year.

LendingClub’s troubles are affecting competitors. Prosper Marketplace Inc., its largest rival, has met with investors including Fortress Investment Group about potential capital injections, a person with knowledge of the matter said.

MORE here
http://www.bloomberg.com/news/articles/2016-05-17/lendingclub-shares-fall-after-investors-suspend-debt-purchases?cmpid=yhoo.headline

BruiserB

  • Sr. Member
  • ****
  • Posts: 425
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #192 on: May 17, 2016, 02:05:57 PM »
Company is considering new ways to draw funding for its loans

Investors who “contributed a significant amount of funding” for loans have paused purchases to examine their performance “or are otherwise reluctant to invest,” San Francisco-based LendingClub said, adding that the retreat is hurting its ability to field new loan applications.

Higher interest rates might be needed to bring back investors, “which may serve to erode the company’s margins in the near term but may be necessary to get the company back on track,” BTIG analysts including Mark Palmer and Giuliano Bologna wrote in a note to clients. Management has to re-instill confidence in LendingClub’s platform “while the company contends with a legal overhang,” they wrote.

Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million of restricted stock units and her salary was increased to $400,000. Both executives also received $500,000 cash awards that will pay out in a year.

LendingClub’s troubles are affecting competitors. Prosper Marketplace Inc., its largest rival, has met with investors including Fortress Investment Group about potential capital injections, a person with knowledge of the matter said.

MORE here
http://www.bloomberg.com/news/articles/2016-05-17/lendingclub-shares-fall-after-investors-suspend-debt-purchases?cmpid=yhoo.headline

Wait, so LC is luring back investors by giving raises and stock to the CEO and CFO? 

I wouldn't so much mind if they did this after they right the ship, but it doesn't look great to do it while it's still listing.

dompazz

  • Full Member
  • ***
  • Posts: 224
    • View Profile
Re: LendingClub stock Plunges After CEO Quits, Firm Finds Loan-Sale Abuse
« Reply #193 on: May 17, 2016, 02:10:44 PM »
Wait, so LC is luring back investors by giving raises and stock to the CEO and CFO? 

I wouldn't so much mind if they did this after they right the ship, but it doesn't look great to do it while it's still listing.
Obviously, the board thinks these two are instrumental to rebuilding the company.  If they are good execs, they can a new job easily, probably with a large signing bonus.  Restricted stock compensates them to stay at LC, turn the company around, and bring up the share price.