0001409970-16-002330.txt : 20160628 0001409970-16-002330.hdr.sgml : 20160628 20160628062119 ACCESSION NUMBER: 0001409970-16-002330 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20160622 ITEM INFORMATION: Cost Associated with Exit or Disposal Activities ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160628 DATE AS OF CHANGE: 20160628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LendingClub Corp CENTRAL INDEX KEY: 0001409970 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36771 FILM NUMBER: 161734636 BUSINESS ADDRESS: STREET 1: 71 STEVENSON ST. STREET 2: 3RD FL. CITY: SAN FRANCISCO STATE: CA ZIP: 94115 BUSINESS PHONE: 415-632-5666 MAIL ADDRESS: STREET 1: 71 STEVENSON ST. STREET 2: 3RD FL. CITY: SAN FRANCISCO STATE: CA ZIP: 94115 8-K 1 form8-kfiledon62816project.htm 8-K Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 22, 2016
 
LendingClub Corporation
(Exact name of registrant as specified in its charter)

Commission File Number: 001-36771
 
 
Delaware
51-0605731
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
71 Stevenson St., Suite 300, San Francisco, CA 94105
(Address of principal executive offices and zip code)
(415) 632-5600
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.05
 
Costs Associated with Exit or Disposal Activities


On June 22, 2016, the Board of Directors (the "Board") of LendingClub Corporation (the "Company") approved a plan to reduce the number of employees, which includes payment of one-time benefits to certain employees whose positions were affected. The plan authorized the reduction of up to 179 positions, or approximately 12% of the Company's workforce. This action, which was communicated to impacted employees on June 27, 2016, is part of an overall plan to reduce costs, streamline operations and more closely align staffing with anticipated long-term loan volumes.

The Company estimates that it will recognize approximately $3.0 million in charges in the quarter ended June 30, 2016, and will conclude disbursing the associated cash payments in the quarter ended September 30, 2016. Substantially all of these charges will be related to employee severance and benefits, net of the reversal of stock-based compensation expense related to unvested stock-based equity awards.

Item 5.02
 
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers


On June 28, 2016, the Company announced that the Board named Scott Sanborn as the Company's Chief Executive Officer and President, effective June 27, 2016. In addition, Hans Morris will step down from his temporary role as Executive Chairman and has been appointed the independent Chairman of the Board. Mr. Morris will continue to be a member of the Risk Committee of the Board.

Any additional information about Messrs. Morris and Sanborn required by this Item 5.02 is hereby incorporated by reference from the Company's Definitive Proxy Statement on Schedule 14A for the 2016 Annual Meeting of Stockholders, filed April 26, 2016.

Item 8.01
 
Other Events

An independent sub-committee of the Board, with the assistance of outside counsel and other advisors, including forensic auditors, conducted the review previously disclosed in the Company’s Form 10-Q for the first quarter of 2016. The Company identified two additional items, described below, that necessitated additional review. We believe that this additional review is substantially complete, although it is possible that additional issues may arise as part of the Company’s response to ongoing government requests for information. The two additional items identified as part of the additional review are:

The first item was a review of methodologies used to determine the net asset values and monthly return figures reported for six private investment funds (the "Funds") managed by the Company’s subsidiary, LC Advisors ("LCA"). The investment assets held by the Funds are essentially loans facilitated through the Company’s platform and are “level 3 assets”, for which no quoted market price is available and whose fair value is therefore subjective and is determined by LCA estimates and calculations.

The Company determined that adjustments were made to the valuation of the Fund’s assets that were not consistent with generally accepted accounting principles. These adjustments affected the direction and the specific returns reported in monthly statements sent to limited partners. We will reimburse limited partners who, during the life of any fund, entered or exited the funds and who were adversely impacted by these adjustments. This reimbursement is expected to cost approximately $800,000 in total, covering the period from inception of the Funds (the earliest of which was March 2011) through May 31, 2016. At May 31, 2016, the Funds had aggregate total assets of $1.1 billion. LCA will also provide to each Fund’s respective limited partners revised return figures that exclude prior adjustments.




The Company and LCA engaged an independent valuation firm, with specific expertise in the valuation of marketplace assets, to provide valuation services to the Funds.

In addition, as previously disclosed, at December 31, 2015, the investment parameters of one of the LCA Funds, with respect to the allocation of 60-month loans, were exceeded. The Company’s review has found that this was due to non-adherence to the fund’s investment strategy, including in part due to the purchase of loans in the first quarter of 2016 that were about to expire on the Lending Club platform.

The Company and LCA have made several changes to improve the governance and the operations of the Funds as a result of this additional review. In June 2016, LCA established a majority independent Governing Board (the "LCA Board") for the Funds. The LCA Board will provide fiduciary oversight and make binding determinations for certain actions and activities of the Funds including approval of valuation policies and procedures, and review and adherence to respective investment strategies. Further, we are realigning responsibilities for accounting and financial reporting for the Funds within the Company.

Second, the Company identified 32 loans made in the second half of December 2009 through the Lending Club platform, totaling approximately $722,800 in originations and $25,000 in revenue, to the Company’s former CEO, Renaud Laplanche, and three of his family members. All but three of these loans were repaid in full in January and February of 2010, with the remaining three loans held to maturity and paid in full. The Company’s review has found that these loans were issued in order to help increase reported platform loan volume for December 2009. Based on the review, the Company is confident that there are no other situations in which Mr. Laplanche inappropriately originated loans in his or his family’s name during periods after December 2009.

On June 28, 2016, the Company issued a press release announcing the foregoing matters, a copy of which is furnished as Exhibit 99.1 to this Form 8-K, and incorporated by reference in this Item 8.01.

The 2016 Annual Meeting of Stockholders ("Annual Meeting") will reconvene today, June 28, 2016, at 11:00 a.m. Pacific Time with the same virtual meeting access (www.virtualshareholdermeeting.com/LC2016). Only stockholders of record as of the close of business on April 11, 2016 will be able to vote and ask questions during the meeting using the virtual meeting access. Other interested parties may listen to the audio webcast of the Annual Meeting using the same link above or may dial into a listen-only line by dialing +1 (877) 883-0383, or outside the U.S. +1 (412) 902-6506, with a conference ID 0183459, ten minutes prior to 11:00 a.m. Pacific Time (or 2:00 p.m. Eastern Time).

Item 9.01
 
Financial Statements and Exhibits
(d)

 
Exhibits
Exhibit
Number
 
Exhibit Title or Description
99.1

 
Press Release dated June 28, 2016





SIGNATURE(S)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
LendingClub Corporation
Date: June 28, 2016
By:
/s/ Carrie Dolan
 
 
Carrie Dolan
 
 
Chief Financial Officer
 
 
(duly authorized officer)



EX-99.1 2 exhibit99162816.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1
Lending Club Names Scott Sanborn CEO
Realigns Costs with Lower Origination Volumes
Discloses Additional Findings and Actions Taken

SAN FRANCISCO - June 28, 2016 - Lending Club (NYSE: LC), the world’s largest online marketplace connecting borrowers and investors, announced today that the board of directors named Scott Sanborn as Lending Club’s CEO and President. Separately, Hans Morris, who had assumed the temporary role of Executive Chairman, has assumed the role of Chairman of the Board of Directors.
“Scott and the management team have demonstrated they can lead Lending Club through this turbulent time,” said Mr. Morris. “The board has decided this is the right time to hand full responsibility over to Scott in his role as the CEO. With today’s announcements and Scott at the helm, Lending Club is now in a position to move forward.”
“We have demonstrated the power of the Lending Club marketplace model to generate attractive, risk adjusted returns to investors,” said Lending Club CEO and President Scott Sanborn. “We are working closely with investors to rebuild confidence and are encouraged to see them returning to the platform.”
Annual Stockholder Meeting Topics
In addition to the formal business related to its Annual Stockholder Meeting ("Annual Meeting"), Lending Club will be addressing the following topics during its Annual Meeting call and webcast which occurs today at 11:00 a.m. Pacific Time (Tuesday, June 28, 2016, - see webcast and conference call information below):
CEO and Independent Chairman Appointments - Lending Club announced that the company’s Board of Directors has appointed Scott Sanborn as CEO and President and that Hans Morris has assumed the role of independent Chairman of the Board.
Substantial Conclusion of Internal Review, Two Items Identified - The first item related to adjustments to the valuation of assets held by six private funds managed by LC Advisors ("LCA") that were not consistent with generally accepted accounting principles and impacted net asset values and monthly return figures for the LCA funds. In response, Lending Club and LCA engaged an independent valuation firm, with specific expertise in the valuation of marketplace assets, to provide valuation services to the LCA funds, and Lending Club and LCA have made several changes to improve governance of the funds, including establishing a majority independent Governing Board. The second item related to loans made in December 2009 to the company's former CEO, and three of his family members.
Q2 Origination Volume, Incentives and Certain Expenses - Investors continue to return to the Lending Club platform to invest in loans since pausing in early May. Based on quarter to date originations, the company expects loan originations in the second quarter of 2016 to be roughly one third lower than in the first quarter of 2016. In addition, the company expects to report investor incentives of roughly $9 million, $15 - $20 million of additional expenses related to employee retention, employee severance, advisory relationships, board review, remediation and due diligence activities, and a goodwill write-down of between $20 - $40 million related to slower growth expectations for Springstone, subject to finalization of this analysis.



Organizational Changes - In light of lower loan volumes in the second quarter and recognizing that fully restoring investor confidence may take time, the company has decided to reduce 179 positions in the organization.
Progress on Controls, Compliance and Governance - Over the last seven weeks, Lending Club initiated a comprehensive review of its controls, compliance and governance and has taken actions that included implementing KPMG best practice recommendations; increasing testing of data changes; increasing compliance and oversight resources; aligning business and control functions into a better risk management structure; and retraining employees on code of conduct and ethics and reinforcing the importance of a high compliance culture.
Key Second Half of 2016 Drivers - In an effort to reignite the platform, Lending Club provided several investor incentives (to both retail and institutional investors) most of which are expected to continue into the third quarter. The company expects to transition away from these incentives in the fourth quarter and plans to resume revenue and EBITDA growth in the first half of 2017.
New Policies on Anti-Pledging and Ecosystem Investing - Lending Club’s Board has established new policies prohibiting pledging of Lending Club shares, and prohibiting the company from making investments in ecosystem partners that invest in Lending Club loans.
Webcast and Conference Call Information
The Annual Meeting will reconvene today, June 28, 2016, at 11:00 a.m. Pacific Time with the same virtual meeting access (www.virtualshareholdermeeting.com/LC2016). Only stockholders of record as of the close of business on April 11, 2016 will be able to vote and ask questions during the meeting using the virtual meeting access. Other interested parties may listen to the audio webcast of the Annual Meeting using the same link above or may dial into a listen-only line by dialing +1 (877) 883-0383, or outside the U.S. +1 (412) 902-6506, with a conference ID 0183459, ten minutes prior to 11:00 a.m. Pacific Time (or 2:00 p.m. Eastern Time).
About Scott Sanborn
Scott Sanborn is CEO and President of Lending Club. Appointed in June 2016, he was charged by the Board of Directors with transforming the company and bringing a heightened degree of transparency and disciplined growth to Lending Club operations.
A six-year veteran of the company, Scott previously held the roles of President, Chief Marketing Officer and Chief Operations Officer. He helped lead the company through a prolonged period of triple digit growth that led to its 2014 IPO, and has been a driving force in the management and development of the organization.
Before joining Lending Club, Scott was the Chief Marketing and Revenue Officer for eHealth Insurance, a publicly traded ecommerce company, where he helped create double digit growth in revenue and new customer acquisition. His earlier roles included having been President of RedEnvelope, Inc., an e-commerce and catalogue retailer of upscale gifts, and Senior Vice President of Marketing for the Home Shopping Network, a television and internet retailer of consumer products. He holds a BS from Tufts University.
About Lending Club
Lending Club's mission is to transform the banking system to make credit more affordable and investing more rewarding. The company's technology platform enables it to deliver innovative solutions to borrowers and investors. We operate at a lower cost than traditional bank lending programs, so we're able to pass the savings on to borrowers in the form of lower rates and to investors in the form of solid returns. Lending Club is based in San Francisco, California. More information is available at https://www.lendingclub.com. Currently only residents of the following states may invest in Lending Club notes: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MI, MN, MO, MS, MT,



NE, NH, NJ, NV, NY, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, or WY. All loans are made by federally regulated issuing bank partners.
Contacts
For Investors:
James Samford
IR@lendingclub.com

Media Contact:
PR@lendingclub.com
Safe Harbor Statement
Some of the statements in this above are forward-looking statements. The words anticipate, believe, estimate, expect, intend, may, outlook, plan, predict, project, will, would and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. The company may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. The company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities.
Please see our Risk Factors in our Form 10-K for the period ended December 31, 2015, as filed with the SEC on February 22, 2016, and Form 10-Q for the period ended March 31, 2016, as filed with the SEC on May 16, 2016.

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