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[Mark12547]

I kind of agree with Moth's point, though: while the regulators just got 1 million bucks, we are getting nothing. Why is that right?

Certainly.  I see his point also.  But it seems to me we are likely to come out farther ahead if Prosper is required to repurchase all defaulted, charged off, and 4+ loans instead of waiting and depending on PMI or their agent to properly service the still active loans.  I think the CA suit can pursue Larsen and others to find sufficient funds for everybody, including the large lenders like carrey79, Fred, Pensioner et al.

I am not versed in securities law. Can the board of directors be held personally responsible for losses when it appears that the sale of unregistered securities wasn't with the intent to defraud?

I'm thinking that we shouldn't count our settlement before the dust settles, and especially not when considering that the lawyers may be getting a significant portion of that settlement for the services they (the lawyers) rendered; as well as we don't know how disruptive this will be to Prosper's current operation on loans that are still performing; or the excuse the SEC C&D, NASAA proposed settlement, or the Class Action case would convince some borrowers that they can stop paying (even though we "Note Purchasers" know that none of this actually affects the agreement between the borrowers and Prosper or Web Bank).

[LoanChimp]

I kind of agree with Moth's point, though: while the regulators just got 1 million bucks, we are getting nothing. Why is that right?

Certainly.  I see his point also.  But it seems to me we are likely to come out farther ahead if Prosper is required to repurchase all defaulted, charged off, and 4+ loans instead of waiting and depending on PMI or their agent to properly service the still active loans.  I think the CA suit can pursue Larsen and others to find sufficient funds for everybody, including the large lenders like carrey79, Fred, Pensioner et al.

I am not versed in securities law. Can the board of directors be held personally responsible for losses when it appears that the sale of unregistered securities wasn't with the intent to defraud?

I'm thinking that we shouldn't count our settlement before the dust settles, and especially not when considering that the lawyers may be getting a significant portion of that settlement for the services they (the lawyers) rendered; as well as we don't know how disruptive this will be to Prosper's current operation on loans that are still performing; or the excuse the SEC C&D, NASAA proposed settlement, or the Class Action case would convince some borrowers that they can stop paying (even though we "Note Purchasers" know that none of this actually affects the agreement between the borrowers and Prosper or Web Bank).

Personally, I don't see any good coming out of it. Except for the lawyers, that is... 

[bamalucky]

LC,are you afraid all your <edit because its the lobby>  will come to naught?

[LoanChimp]

LC,are you afraid all your <edit because its the lobby>  will come to naught?

I'm afraid that the diligence I took while lending on Prosper will be undermined by some who appear to have taken very little...

[bamalucky]

LC,are you afraid all your <edit because its the lobby>  will come to naught?

I'm afraid that the diligence I took while lending on Prosper will be undermined by some who appear to have taken very little...

Did your diligence uncover unlicensed securities?

[LoanChimp]

LC,are you afraid all your <edit because its the lobby>  will come to naught?

I'm afraid that the diligence I took while lending on Prosper will be undermined by some who appear to have taken very little...

Did your diligence uncover unlicensed securities?

Unfortunately, no -  just a lot of deadbeat borrowers and greedy lenders.

[bamalucky]

My diligence did uncover it.I reported it to my state.I got laughed at by people you know personally.

[cowdog]

We didn't punish Prosper. They broke laws and are being fined for that. They had legal counsel. Either that was bad legal counsel (and I believe Ira said Prosper would be able to sue the legal counsel in that case) or they had good legal counsel and didn't follow the advice.

I'm betting they didn't follow the advice; that it was a setup to fail.

 

[Loan_shark_74]

That $1 million that will disappear into state coffers represents for lenders a lot of resources that will not be spent servicing our loans and maintaining the timely flow of payments into our accounts.

This lawsuit will enrich the Rosen law firm, to be sure.  In a settlement (or a judgment that bankrupts Prosper), lenders will get very little and the lawyers will get fat fees.

We are cutting off our noses to spite our face here.

I agree.

[onthefence]

I'm afraid that the diligence I took while lending on Prosper will be undermined by some who appear to have taken very little...

Prosper always had the potential to tank for any number of reasons.  If you didn't factor that into your risk assessment, you were a fool.  Even if this class action suit does not go through, prosper could still tank.

Prosper was selling unregistered securities and the purchasers of those securities have every right to request they be reimbursed.

Now most of the crowd in this forum has far less of a case for having been deceived by the marketing machine.  We kept each other informed & updated as we went along.  But everyone else who were not even permitted to be told about the information available have every cause to go after prosper.  There was a very deliberate concerted forceful effort to shut up the open flow of information to other lenders.

[ABuckeye1]

Please help me understand how this works as my limited understand and all legal jargon used in the following questions comes from watching Judge Judy...

IF everything goes against Prosper and full relief is granted, does that mean:

1) Prosper would be required to repurchase all loans issued ($274M), only those outstanding, only those late/defaulted ($27M), or some combination?
2) Lawsuits generally only require the Plaintiffs be made whole, plus punitive damages. If someone made loans but still had a green circle (aka Lendingstats: ABuckeye), what could they expect? Would they maybe be given an option of selling the loans back to Prosper for remaining face value with no future interest, or keep the loans and that future interest?
3) Would Prosper have to make fully whole the losses, even though people should have some expectation of losses? Like would they only have to pay back losses that exceeded some expected loss, like Actual ROI - Experian ROI = Prosper's Liability?
4) Won't this destroy Prosper should they lose, IF they ever intended to continue business?

[onthefence]

@ABuckeye1 - I don't think anyone here really knows the answers to those questions.  Before there was a lawsuit such issues would be mere speculation.  Now that one is in play, the only way to really find out is to see how things pan out.

I suspect there will be settlement vs. a judgment.  By having the officers & directors personal liability in play, just going bankrupt & folding may not be the best option for prosper.  I hope for John Witchel's sake that he kept paying for executive liability insurance.

[The_Cat]

Now anyone who would serve on a board without liability insurance would be really stupid.......oh 

[beerbud1]

I called Bob Webster, Communications Director of NASAA and asked him a few questions. He was unable to answer my questions but gave me the name and telephone number of the Senior administrator of the State that took the lead in negotiating the settlement with Prosper.
The Securities Regulator asked that I do not name him publicly(Although I have his name and telephone number). (Large Midwestern State) (They Like Beer and Baseball)

He confirmed to me that he was the lead negotiator with NASAA's settlement with Prosper Marketplace, Inc.. He told me that the administrators became aware of Prosper thru News article's and the SEC ruling.

He also told me that very few folks have filed complaints with their individual "States". He said Securities regulator's prefer to act when they've recieved complaints from their citizens.

I invited him to come here and Blog about what took place in the background. He responded that that could cause conflicts of interest and possibly ethical violations of his position, therefore he declined.

He did ask me the site's address and told me that he would have his General Counsel come here and review the Forum.

Fixed: changed blog to Forum.

[NewHorizon]

...have his General Counsel come here and review the Blog.

I missed something.  Which blog?