I think your analysis is WAY too rosy.
First of all, I think that the statute of limitations will probably be gotten around, in light of Prosper's repeated and recent assertions that its business model was fully legal and its notes did not require registration. As I've noted elsewhere, the law is generally that a defendant cannot trick people into not suing, and then after the statute of limitations runs, say "gotcha." That turns your $31M into $71M.
Second, I think that the case will likely settle (or be adjudicated) for far more than 20%. While it's true that 20% in many cases might be a reasonable (or even high) settlement valuation, this is not the usual case. There is already an SEC determination of liability. While I imagine that is not conclusive, it is probably admissible and would carry significant weight.
And the possible BK of Prosper, which in the ordinary case would significantly reduce the settlement value, also will not have the usual effect, because there are lots of deep-pocketed defendants and possible future defendants to turn to here.
I also think that this case may not drag on for at least two years. Although that would normally be a safe (even conservative) assumption, once again this is not the usual case. The issues are few and narrow. I doubt much discovery is necessary, and the major issues -- whether Prosper unlawfully sold unregistered securities and if so, what is the proper remedy -- may well be amenable to summary judgment as they are both basically questions of law. That could easily happen within a year or less. Although Prosper certainly could appeal an adverse decision, which would absolutely drag the case on for more than two years, who is going to invest in Prosper (as a VC, in an IPO, or as a lender) with a judgment (albeit not a final one) hanging over it? The large majority of judgments are affirmed on appeal.
Moreover, if you are correct that Prosper gets a big infusion of cash to take care of the securities class action and keep it solvent, then another enterprising attorney might decide that another class action is in order -- this time, over Prosper's numerous breaches of contract, fiduciary duty, and fraud (basically as set forth in the lawyer letter sent to Prosper a while back). The statutes of limitations in California for breach of written contract is 4 years from the breach, and for fraud is 3 years from the discovery of the fraud.
Aside from the above legal issues, you also neglect to discuss the significant business problems of Prosper. As we all know, even before the "quiet period" Prosper's loan originations were flat. As I explained in
my blog post here, the 12-month moving average had basically reached a plateau of about $7M a month for many months. We also know that a bit over a year ago, Larsen acknowledged that originations needed to increase 400-500% for Prosper to just break even. Where is that growth going to come from? Sure, a secondary market would help a bit. But not enough.
Even with a spiffy new SEC registration, verification and collections will still suck (as you point out, they may even be worse, since Prosper states it has no obligation to do jack -- except for referring month late loans to a CA). Thus, loan performance will be no better than it is now (and may well be worse, as the economy is worse now than it was, and more borrowers will experience financial difficulties). Lenders won't even own the loans anymore, so IMHO (as I've explained in more detail elsewhere) someone would have to be dumber than a rock to "lend" on Prosper with the class action hanging over its head.
And there is more negative commentary about P2P lending in general, and Prosper in specific, now than there was. Prosper won't be able to get its PR puff pieces published with such ease anymore, and even if it could, it won't be able to misrepresent the risks anymore with the SEC looking over its shoulder (no more Larsen interviews claiming the default rate is only 4%, or whatever spurious figures arrived at via bogus calculations he liked to trot out).
Put that all together, and my "weather forecast" is dark clouds building over Prosper, with a high likelihood of a hurricane wiping it out completely. Of course (and as always), TINLA and YMMV.
