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[beerbud1]

http://investmentfraudpro.blogspot.com/2008/12/national-settlement-with-prosper.html

NASAA, the group of national state securities commissioners, announced a settlement with Prosper Marketplace Inc. for the selling of unregistered securities to the public. As part of the settlement, Prosper Marketplace agrees to pay a fine of $1 million. The entire press release is below.

December 1, 2008
Prosper Marketplace Inc. Enters Settlement With State Securities Regulators Over Sales of Unregistered Securities
Online ‘Peer-to-Peer’ Lending Service Agrees to $1 Million Penalty

WASHINGTON, D.C. December 1, 2008 — The North American Securities Administrators Association (NASAA) today announced that state securities regulators have reached a settlement in principle with Prosper Marketplace, Inc., an online “peer-to peer” lending service, to resolve matters relating to the sale and offer of unregistered securities and the omission of material facts in connection with the offer, sale or purchase of a security.

Under terms of the settlement, San Francisco-based Prosper agreed not to offer or sell any securities in any jurisdiction until it is in compliance with that jurisdiction’s securities registration laws. Prosper also agreed to pay a fine totaling $1 million to the states. In consideration of the settlement, the states will terminate their investigation of Prosper’s activities related to the sale of securities before November 24, 2008.

Prosper provides a private online lending “marketplace” that allows prospective borrowers and lenders to find one another. Through its website, Prosper conducts an electronic auction to fund unsecured promissory notes. The website features a list of potential loans and investors bid against each other to finance the loans. Funds from the lowest bidders are pooled together to fund the loans. Prosper issues notes to those lenders funding the loans and services that note.
“The notes issued by Prosper are securities, but since Prosper’s activity began in 2006 these securities were not properly registered,” said Fred Joseph, NASAA President and Colorado Securities Commissioner.

Joseph said the sale of interests and/or promissory notes to lender members in Prosper’s online private lending program constitutes the offer and sale of securities as that term is defined under federal securities law. State securities regulators also found that Prosper failed to provide investors with necessary information, such as the firm’s financial statements.

Several states had been investigating Prosper’s activity and were considering or preparing enforcement actions. Earlier this year, a working group involving state securities regulators from approximately 20 jurisdictions was formed to seek a collaborative approach to these issues. In mid-October, Prosper stopped issuing new loans and accepting new investors. The firm is currently seeking registration with the U.S. Securities and Exchange Commission.

From February 2006 to present, Prosper has offered and sold promissory notes with fixed annual interest rates ranging from 7 percent to 36 percent, amortized over a three-year term with equal monthly payments. As of September 29, 2008, Prosper’s website reported that it had 810,000 members and $175 million in loans funded.

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the provinces and territories of Canada, and Mexico.
Posted by Andrew Stoltmann at 11:44 AM   

[bamalucky]

BB,your title needs work.

[112233]

lobby please

[Nora_Lenderbee]

State securities regulators also found that Prosper failed to provide investors with necessary information, such as the firm’s financial statements.

Indeed.

[NewHorizon]

Looks like a related concern was brought up ages ago.

... and lenders apparently didn't really care.

http://www.prosperreport.com/threads/6/1/6114.0.HTM

[Nora_Lenderbee]

Looks like a related concern was brought up ages ago.

... and lenders apparently didn't really care.

http://www.prosperreport.com/threads/6/1/6114.0.HTM

Dig this quote from nonattender:

The forum likely holds enough talent to fend off even the likes of the SEC... if such was necessary.

Second Lobby nomination.

[christoofar215]

Lobby Lobby Lobby

[112233]

Looks like a related concern was brought up ages ago.

... and lenders apparently didn't really care.

http://www.prosperreport.com/threads/6/1/6114.0.HTM

well, there were 2 questions:

1) does the SEC have jurisdiction?
2) has anyone checked to see if Prosper is registered with them?

you have to answer question #1 before #2, and I dont think anyone in that thread really knew. the the SEC clarified the issue only recently (as far as most of us know. CL and JW apparently paid an attorney 20k early on to find out and based on the fine prosper just paid, it looks like the advice was bad or they ignored it)

[Urbi_et_Orbi]

Who is this outfit and why/how do they have the right to negotiate settlements with Prosper?

[christoofar215]

http://en.wikipedia.org/wiki/NASAA


NASAA looks like a club for securities regulators... I'm sure they get money through magazine/newsletter subscriptions, stuff like that in addition to the exams they administer.


If NASAA is tripped off by Prosper---you can bet every securities regulator in every state is tipped off to them, too.    In Prosper's eyes, this is not an organization you want to ignore.

[DakotahFury]

It would be interesting to know how long these negotiations had been going on...especially considering that PMIs customer service seems to have been caught off-guard by the SEC findings just one week ago.

[Urbi_et_Orbi]

...and Prosper has nothing to add to this, beyond tips for Thanksgiving dinner...

[112233]

their blog reminds me of the 3 wise monkeys

[beerbud1]

http://www.nasaa.org/home/index.cfm

http://www.nasaa.org/NASAA_Newsroom/Current_NASAA_Headlines/9906.cfm

[jazzpianist]

So then where's the sanction (i.e penalty) for the regulators in all the states that allowed Prosper to "illegally" sell the "unregistered securities" and failed to protect investors (if that's their charter).  It's not like Prosper didn't go state by state and ask them.  40+ states were all wrong on the same issue?  That doesn't inspire confidence in the oversight organization.  We all saw the process where initial Prosper was available to issue loans in some states and later in more...