As was commented amongst us a while back, Prosper's earlier California-only service seemed basically a "screw you" to the SEC after the SEC told Prosper to shut down. Here's how it apparently went down, and the SEC was not amused:
In the April 16 teleconference between representatives of Prosper, the California Department of Corporations and members of the staff, you advised the staff, without allowing for questions, that Prosper intended to commence an intra-state offering in California in reliance on Section 3(a)(11) of the Securities Act of 1933. As we requested in our follow up conversation with counsel on April 17, to which we have not yet received a response, in order to evaluate your compliance with the Securities Act of 1933, please provide us with a full description of how the intra-state offering will be conducted and a legal analysis evaluating the availability of the Section 3(a)(11) exemption, particularly in view of the pending registration statement for the Prosper Notes. We note that you have commenced such an offering on your web site so we believe a prompt response is warranted.
http://www.sec.gov/Archives/edgar/data/1416265/000000000009037657/filename1.pdfBolding is mine. This is where they basically rebuffed the SEC.
(Pre-approved for lobby, if there's any desire.)
ETA: this letter is dated April 29, 2009. Prosper shut down again on May 9. I had thought Prosper repurchased the 13 loans that originated during this period, but I'm not seeing evidence of this on Prosper's performance data page.
