I hope "investors" carefully read the S-1.
*We don't verify information.
*You assume the risk that information provided by borrowers may be intentionally false.
*Status information given on loans between inception and March 31, 2009 shows 31.3% of loans had been at least 15 days late at least once, and 20% had defaulted.
*"Some borrowers may use our platform to defraud lender members"
*"The fact that Prosper will have the exclusive right and ability to investigate claims of identity theft in the origination of loans creates a significant conflict of interest between Prosper and the lender members."
*"In the unlikely event that we receive payments on the corresponding borrower loans relating to your Notes after the final maturity date, you will not receive payments on your Notes after maturity."
*"Our platform may fail to comply with borrower protection laws such as state lending laws, or federal consumer protection laws such as the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. Borrowers may make counterclaims against us, any collection agency or you after collection actions have commenced." - OK. I have to comment on this one. What collection efforts???
*Regarding the lawsuit: "We face a contingent liability for securities law violations in respect of loans sold to our lender members from inception until October 16, 2008. This contingent liability may impair our ability to operate our platform and service the borrower loans that correspond to your Notes. . . . As a result of our prior operations, our lender members who hold these loans may be entitled to rescind their purchase and be paid their unpaid principal amount of the borrower loans plus statutory interest. In addition, since our inception, the aggregate principal amount of loans purchased through our platform by purchasers not affiliated with Prosper was $177.6 million, of which $30.4 million had defaulted, $5.9 million were more than 30 days past due, $81.3 million of principal had been repaid and $66.9 remains outstanding. Prosper is potentially liable for the remaining outstanding principal amount if the current borrowers stop making payments."
I could keep going but this post is long enough.