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Lending Club forces out its CEO and stock collapses

Co-founder Renaud Laplanche is out.

TechCrunch Disrupt NY 2014 - Day 2 Photo by Brian Ach/Getty Images for TechCrunch

Lending Club CEO Renaud Laplanche has resigned after the company's board of directors discovered the company had disregarded the instructions of an investor who buys loans from the alternative lender. The stock dropped more than 25 percent in pre-market trading on Monday morning.

The board said that Lending Club sold $22 million in loans to a single investor that violated the investor's investing instructions, and that several employees knew about it.

"A key principle of the Company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees," the board said in a press release. "While the financial impact of this $22 million in loan sales was minor, a violation of the company's business practices along with a lack of full disclosure during the review was unacceptable to the board. Accordingly, the board took swift and decisive action, and authorized additional remedial steps to rectify these issues."

Lending Club President Scott Sanborn will become acting CEO.

This article originally appeared on Recode.net.