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In May of 2016, LendingClub CEO Renaud Laplanche faced the most embarrassing outcome imaginable for a founder. He was forced to resign from the peer-to-peer lending company he had created, just 18 months after taking it public in a splashy debut that saw its shares soar 56 percent, and its market cap hit an a stunning $8.5 billion.
Laplanche, said LendingClub’s board at the time, had taken out loans on the platform for himself and family members without being transparent about them. Laplanche reportedly also did not disclose a personal stake in an investment firm in which LendingClub had considered making an investment.
Turn - Events - Today - Victim - Laplanche
It was a stunning turn of events as they unfolded. Today, however, it looks like the biggest victim was not Laplanche but 12-year-old LendingClub, whose market cap now hovers around $1.6 billion. Not only has Laplanche moved on to a new funding startup called Upgrade that he founded soon after leaving LendingClub and for which he has already raised $142 million from investors, but a two-year-long SEC investigation concluded Friday with a settlement that saw Laplanche neither admit nor deny wrongdoing. Instead, he agreed to pay a $200,000 fine and to be barred from the securities industry for three years.
The last will not, as you might imagine, impact his role as CEO of Upgrade. Though, Jina Choi, the longtime head of the SEC’s San Francisco unit, has called “barring people from their industries” one of the SEC’s “most impactful remedies,” in Laplanche’s case, the ban seems mostly for show as it bars him from very specific securities activities in which he is not currently involved. To wit, he can’t serve as registered investment advisor or a broker dealer or as municipal bond trader, but he isn’t doing any of these things anyway at Upgrade, which purely manages institutional capital.
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