Prosper files another S-1a June 1, 2009, and again June 26

[Investar]

Prosper's SEC/Edgar list of documents:
http://www.sec.gov/cgi-bin/browse-edgar?NONONOaction=getcompany&CIK=0001416265

and then Friday, June 26, 2009
Prosper filed Proposal Number 5 with the Securities and Exchange Commission
http://www.prospers.org/forum/prosper_files_another_s1a_june_1_2009-t13926.0.html;msg246489#msg246489

[divindj]

very interesting read... looks like P is going to make a WHOLE NEW SET OF INCOME-REQUIREMENTS IN ORDER TO LEND... HAHAHAHAHAHAHAHAHAHAHAHA!!! seeing how they were totally incompotant on verifying incomes of borrowers just how do they plan on determing members non-real-estate-net-worths:

FROM PAGE 6 AT http://www.sec.gov/Archives/edgar/data/1416265/000110465909035890/a08-29602_5s1a.htm

Financial suitability
 
 To purchase Notes, lender members located in Alaska, Idaho, Kansas and Pennsylvania must satisfy minimum financial suitability standards and maximum investment limits. Specifically, lender members must either: (1) have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (2) have a net worth (determined with the same exclusions) of at least $250,000. In addition, no lender member located in these states may purchase Notes in an amount in excess of 10% of the lender member’s net worth, determined exclusive of home, home furnishings and automobile.
 
 Lender members that are residents of California must meet certain suitability requirements, described herein. There are no suitability requirements for individuals who have not purchased more than $2,500 of Notes in the past 12 months. To purchase more than $2,500 of Notes, a California lender member’s investment must not exceed 10 percent of his or her net worth, and either: (1) the lender member must have a minimum net worth of at least $75,000 and had minimum gross income of $75,000 during the last tax year and will have (based on a good faith estimate) minimum gross income of $75,000 during the current tax year; or (2) the lender member must have a minimum net worth, exclusive of homes, home furnishings and automobiles, of $200,000. Assets included in the computation of net worth shall be valued at not more than fair market value. For the purpose of this net worth requirement, both a husband and wife may be counted as a single individual.
 
 Lender members should be aware that we may apply more restrictive financial suitability standards or maximum investment limits to residents of certain states. If established, before making commitments to purchase Notes, each lender member will be required to represent and warrant that he or she meets these minimum financial suitability standards and maximum investment limits. See “Financial Suitability Requirements” for more information.
 

[112233]

Im thinking something similar to the declaration you sign when opening a brokerage account. There is no verification. They take your word at face value (at least with my experience)

[xraider]

Since Prosper doesn't bother to verify, and will want to have as many lenders loan purchasers suckers loan purchasers as it can, I wonder if it will prominently post, "You too can benefit from the high rate of return Prosper offers.  Just check here!  No asset check!"

But, since most of us in California haven't done much lending in the past 12 months, I guess we're eligible to rev up our portfolios again irrespective of our incomes.

[Investar]

I gather the highlighted text on pages 5 and 6 of the S-1/A are of particular interest to the SEC. Who really owns the notes (loans) and where do lenders stand if Prosper goes belly-up? Prosper does. We won't know where we stand until such event occurs. From highlight on page 5 of the S-1/A  REGISTRATION:

Security Interest—Ranking  "The Notes will not be contractually senior or contractually subordinated to any other indebtedness of Prosper. All Notes will be unsecured special, limited obligations of Prosper. The Notes do not restrict Prosper’s incurrence of other indebtedness or the grant or imposition of liens or security interests on the assets of Prosper and holders of the Notes do not have a security interest in the corresponding borrower loan or the proceeds of that loan. Accordingly, in the event of a bankruptcy or similar proceeding of Prosper, the relative rights of a holder of a Note, as compared to the holders of unsecured indebtedness of Prosper are uncertain."

This text is revised from the previous S-1/A. As I understand it, this has been one of the sticking points. Prosper has tried various methods to protect lenders by segregating borrower loans from other assets and liabilities. Nothing they tried would fit the regulatory mold our grandfathers and their parents fashioned in 1933.

[Beerbud1]

Nominate this thread for the Lobby.

[Mark12547]

Nominate this thread for the Lobby.

Investar, any problems if we move this thread into the Lobby?

[Tokyo Joe]

Well so much for regular people helping regular people...

Now it's supposed to be fat cats who do the lending.

And this is peer-to-peer how??

[Investar]

Nominate this thread for the Lobby.

Investar, any problems if we move this thread into the Lobby?

No problem. This should be shared with Pro$per-ers and the non-Pro$perous alike.

[Staneslav]

Well so much for regular people helping regular people...

Now it's supposed to be fat cats who do the lending.

And this is peer-to-peer how??

Availability of lenders funds wasn't ever a problem from Prosper prior to the first closing, hence why they cared more for borrowers (it was where the profit bottleneck was). Now I have to wonder if they're risking running into that problem.

[Faithful_Steward1]

So you have two forms of risk here:

1) Borrower defaults
2) Prosper default through bankruptcy

With these being unsecured loans, you'd be better of buying junk bonds in an established company and getting comparable if not better interest rates while eliminating risk item 1) above.

In the immortal words of BigGulp: "I won't lend".

[Tokyo Joe]

So you have two forms of risk here:

1) Borrower defaults
2) Prosper default through bankruptcy

With these being unsecured loans, you'd be better of buying junk bonds in an established company and getting comparable if not better interest rates while eliminating risk item 1) above.

In the immortal words of BigGulp: "I won't lend".

Not to mention bonds offer liquidity that Prosper loans do not.

[deskguy]

lendingclub.com already has these financial requirements.
 deskguy

[112233]

lendingclub.com already has these financial requirements.
 deskguy

coincidence or is prosper copying them again?

.. or is this a registration requirement?

[112233]

With respect to the plan of distribution, the Prosper notes are offered and sold on the internet to the public at large. There is no special level of financial sophistication or expertise that Prosper lenders must have. This wide dissemination and solicitation to the public with no attempt to limit investors is indicative of a security. See Reves, 494 U.S. at 68 (the notes “were…offered and sold to a broad segment of the public, and that is all we have held to be necessary to establish the requisite ‘common trading’ in an instrument”); Pollack v. Laidlaw Holdings, Inc., 27 F.3d 808, 814 (2d Cir. 1994) (concluding that the broad-based, unrestricted sales to the general investing public supported a finding that mortgage participations were securities under federal securities laws).

http://www.sec.gov/litigation/admin/2008/33-8984.pdf