The ouster of LendingClub Corp.’s chief executive after a board review uncovered improper activity in the company’s lending process highlights the risk of a rapidly growing business and will likely draw further regulatory scrutiny of the peer-to-peer lending business, Fitch Ratings said Monday.

Shares of LendingClub LC, -3.32% , a leading player in the online loans space, cratered and were on track for their worst one-day decline, after news broke that CEO Renaud Laplanche and three other executives were leaving the company, after a review found they sold an investor $22 million in “near prime” loans, violating the investor’s explicit instructions.

The board found that the executives were aware the loans did not meet the investor’s criteria and had altered the application date on some of the loans to make it seem that they complied.

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“A key principle of the company is maintaining the highest levels of trust with borrowers, investors, regulators, stockholders and employees,” Hans Morris, a director who has taken on the role of executive chairman, said in a statement. “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.”

The review also revealed an unrelated material weakness in financial reporting related to the failure of Laplanche to disclose personal investment interests held in a third-party fund. Former Treasury Secretary Lawrence Summers, former Morgan Stanley CEO John Mack and VC and former research analyst Mary Meeker are independent directors on LendingClub’s board, according to FactSet.

LendingClub has surrendered about $700 million in market value in today’s session so far, its worst one-day decline in market capitalization since Feb. 25, according to Dow Jones data. The company went public in December of 2014 on the New York Stock Exchange.

See: LendingClub stock craters as CEO resigns

The news comes at a challenging time for LendingClub and its rivals, which have emerged since the financial crisis undermined public confidence in traditional lenders and made them more reluctant to lend to small businesses and consumers with poor credit scores.

Platforms including On Deck Capital Inc. and Prosper Marketplace Inc. have recently reported weakening investor demand for their loans and a slowdown in loan origination, as investors begin to fret that regulators will disrupt the business model and look elsewhere for better returns.

Read: OnDeck losses grow as lender sells fewer loans

LendingClub was among the 10 fastest-growing measured by revenue of more than 1,200 U.S. listed companies in 2015, according to FactSet. The company’s disclosure of “noted material weakness” in its internal controls follows a similar disclosure by Prosper in April 2015, said Fitch.

“ Fitch takes a more cautious view of companies that exhibit rapid growth in part because it creates a significant stress on a company’s infrastructure and increases the risk of internal control issues and/or regulatory challenges,” the agency said in a statement.

Read:LendingClub shifts risk ahead of court ruling, others in crowded field may follow

Meanwhile, equity analysts rushed to downgrade the stock, with Stifel saying its trust had been shaken by the news.

“Our thesis on LendingClub was based on the opportunity for LendingClub to build a multi-product suite of services on top of its initial unsecured lending platform,” analysts wrote as they downgraded the stock to hold from buy. “We put a lot of faith in the team’s ability to execute and build trust with lenders and consumers.”

Sterne Agee downgraded the stock to underperform from neutral and cut its price target to $5.00 from $8.00.

The news “only heightens concerns that we have expressed over the durability of the company “market place” funding model,” they wrote in a note.

Sterne Agee has questioned LendingClub’s ability to absorb the $6 billion to $8 billion in new funding required to meet its growth plans, they wrote. While first-quarter earnings were in line with expectations, there was a decline in funding from its institutional investors, which was offset by higher funding from the bank network and self-directed retail investors.

“Our hope had been that we would have heard more about the development of new funding sources such as securitization that could have filled this potential gap,” they wrote. “The headline impact of today’s news only heightens our concerns.”

William Blair took the step of suspending its coverage of the stock. The news, as well as the company’s inability at this time to offer guidance for the second quarter or full year, has left without the information needed to make an investment decision, it said in a note.