Lending Club, a Story Stock That Skimped on the Details

The recent tribulations of Lending Club, a former highflying “peer to peer” lender, provide an object lesson for both companies and their investors: When it comes to financial disclosures, less is definitely not more. Celebrated as a Silicon Valley disrupter set to transform the financial industry, Lending Club first issued public shares at $15 in December 2014. Like other wildly popular disrupters (Theranos, the blood-testing company that is now under siege, comes to mind), Lending Club had a star-studded board and a concept that made investors swoon. By directly connecting borrowers with willing financiers, Lending Club said it was turning “the banking system into a frictionless, transparent and highly efficient online marketplace, helping people achieve their financial goals every day.” Borrowers would get faster and cheaper access to consumer installment-type loans, and lenders would receive higher returns than they would if they had parked their money in a bank.

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