How Lending Club Helped Bring the SEC Into the 21st Century

Shortly after launching, peer to peer lender Lending Club ceased operations as the would-be FinTech giant decided to work out a deal with the Securities and Exchange Commission (SEC). This required the company to explain their 21st century platform to an agency that was regulating based off of an act written in 1933. Lending Club CEO Renaud Laplanche told Business Insider, “It was a pretty stressful and uncertain time.” Yet, his company emerged from the process a mere six months later. So how did Lending Club’s willingness to work with the SEC allow them to grow into the $6.5 billion company they are today?

Although many young startups would have simply pushed onward without worrying about the SEC, Laplanche and his company found it in their best interest to cooperate and ensure that what they were building would be properly regulated. This meant having to explain their peer to peer model (a platform that matches up borrowers with lenders willing to fulfill their loan) to the Commission. While this sounds simple enough, the new technology was something that regulators truly had to dive into and fully understand in order to oversee it. As Laplanche explains, “There was no precedent for the type of registration we were trying to get… I was confident that we’d get it done, but there was a lot of uncertainty around us.”

While Lending Club’s was hard at work building the future of banking for relaunch, the traditional financial industry was crumbling as large firms began buying each other or going bankrupt. As a result of the crisis, those banks left standing pulled back on their lending operations significantly. Ever since Lending Club’s SEC registration was completed in October 2008, the company has had consistent growth. In late 2014, the company even went public and is now listed on the NYSE under the symbol ‘LC’.

Recently, Laplanche shared his story with TechCrunch and Foundation Capital, who turned his “white knuckle moment” into an animated Startup Story. Once again, Laplanche points to their proactive approach to the SEC as one of the reason’s his company was able to not only survive but thrive:

With those rocky days of 2008 far behind them, Lending Club continues to innovate and expand. In the past few months they’ve announced partnerships with Alibaba, BancAlliance, and Sam’s Club amongst others. They’ve also expanded their small business loan operations and funded over $11 billion in small business and personal loans since 2007. In addition to bringing peer to peer lending (which is now also known as “marketplace lending”) into the mainstream, the company also leads the growing FinTech movement. Lending Club’s story of how they helped bring the SEC into the 21st century is not only an inspiring one but also sets a great example for the innovators and entrepreneurs of tomorrow.

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