- LendingClub said to notify regulator of irregularities Sunday
- Board also uncovers failure to disclose interest in fund
The enforcement unit of the U.S. Securities and Exchange Commission is reviewing LendingClub Corp. amid disclosures by the online lending company of abuses tied to loan sales and potential conflicts involving an outside investment fund, said people with knowledge of the matter.
The San Francisco-based company notified the SEC Sunday that it found the irregularities during an internal review, said the people who asked not to be named because the regulator’s examination isn’t public. LendingClub plunged 35 percent to $4.62 in New York trading Monday.
LendingClub said it sold $22 million of loans that were in “contravention” to the buyer’s “express instructions.” Jefferies Group was the purchaser of the loans, a person with knowledge of the matter said.
LendingClub said its internal review also found that the board of directors hadn’t been informed of personal interests held in a third-party fund that the company was considering investing in. The disclosures prompted the resignation of founder and Chief Executive Officer Renaud Laplanche.
SEC spokesman Kevin Callahan declined to comment.