P2P Lending Troubles Everywhere

The USA has P2P lending problems too: The Stunning Fall of LendingClub’s Founder

Laplanche’s decision to step down as chief executive officer of the company he founded sent shock waves through the online lending world, a corner of finance that’s going from hot to not almost overnight. LendingClub’s stock plummeted 35 percent Monday after the company disclosed internal-control lapses and abuses related to the sale of some of its loans. The U.S. Securities and Exchange Commission is now examining what happened, according to people with knowledge of the matter.

The developments mark the biggest setback yet for the business, as well as an embarrassment for some prominent financial figures who’ve lined up behind the idea of matching investors with borrowers. As Laplanche’s vision of bypassing traditional banks went mainstream, John Mack, Lawrence Summers and Mary Meeker all joined his company’s board.

Laplanche resigned after the board found LendingClub had altered dates on $3 million of loans, the company said. The debts were part of a $22 million bundle of near-prime loans sold to Jefferies Group, which didn’t take a loss because LendingClub later repurchased them, according to a person familiar with the matter who asked not to be identified discussing a private transaction.

The sale was found to be “in contravention of the investor’s express instructions,” LendingClub said in a statement.