BancAlliance, a network of community banks that has been snapping up loans from LendingClub, is weighing whether to suspend purchases on the online platform after the company said it's overhauling internal controls.

"We haven't yet made a decision on what should happen," said Brian Graham, chief executive officer of AlliancePartners, the investment adviser helping the community banks buy online consumer debts that LendingClub arranges. "As a regulated bank, you really care about compliance and controls."

LendingClub surprised the market Monday by announcing its founder and CEO Renaud Laplanche resigned after an internal review of a botched loan sale and his disclosure of a stake in an external fund. The stock has plunged 47 percent since then, closing Thursday at about a fourth the price of its initial public offering in 2014.

Delaying Purchases

The revelations have thrown the company's growth plans into question. In interviews, people in the business of buying the debts said LendingClub hasn't adequately explained what prompted the management shuffle, causing some to consider scaling back or delaying purchases. Separately, Jefferies Group and Goldman Sachs Group Inc. are holding off, at least temporarily, on buying LendingClub loans they planned to bundle into new securities, people with knowledge of that situation said.

Since their partnership was announced last year, BancAlliance had emerged as a key supporter of San Francisco-based LendingClub. The Wall Street Journal reported earlier Thursday that the group, which has bought about $200 million in loans to date, temporarily suspended its program on Monday. LendingClub said this week that banks and finance companies supplied 34 percent of the $2.75 billion in funding for the online platform in the first quarter.

Darren McDermott, a spokesman for LendingClub, didn't immediately respond to a request for comment about BancAlliance's move.

Some institutional buyers of LendingClub loans decide monthly how much debt they want to fund on the platform. Those orders can be fulfilled within days. BancAlliance members had spent funds allocated for May when LendingClub made its disclosures, Graham said, while declining to comment on the amount.

"The operative decision is about what our banks choose to do beginning in June," he said. "If we get to June 1 and we don't have all the information we need, we will suspend purchases."

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