Print

[Urbi_et_Orbi]

This item, filed earlier this week, caught my attention this evening:
http://sec.gov/Archives/edgar/data/1416265/000141626511000069/prosperfloridasd1d1d21d11.htm

Up to $131,221 Aggregate Principal Amount of Borrower Payment Dependent Notes Rescission Offer
We are offering, under the terms and conditions described in this prospectus, to rescind (the “Rescission Offer”) the previous purchase of 2,922 of our Borrower Payment Dependent Notes (“Notes”) by residents of the State of Florida during the period beginning on July 10, 2010 and ending on August 5, 2010 (the “Purchase Period”).

In either case, you are also entitled to receive interest at a rate of 6% per annum on the original purchase price of the Rescission Note from the date you purchased the Rescission Note through the Expiration Date

Q: Why are you making the Rescission Offer?
      
A: During the period beginning July 10, 2010 and ending August 5, 2010 (the “Purchase Period”), we inadvertently allowed our registration in Florida to offer and sell our Borrower Payment Dependent Notes (“Notes”) to expire.  We submitted an application to renew our registration to the Florida Office of Financial Regulation (the “FOFR”) on August 5, 2010. The FOFR approved our application effective as of August 6, 2010.  At that time, the FOFR also informed us that, pursuant to Section 517.211(1), Florida Statutes, we were required to make a rescission offer (the “Rescission Offer”) to any Florida resident that purchased a Note from us during the Purchase Period (a “Rescission Note”).
      

[Mark12547]

Nominated for Lobby.

[Xenon481]

Seconded!

[ira01]

So if Prosper is offering to repurchase all loans made by Florida lenders during a window of time in which its registration "inadvertently" lapsed, why isn't Prosper making the same offer to EVERY lender of its P 1.0 loans, considering that Prosper intentionally failed to register those with the SEC at all?  I'll gladly trade my -2% ROI for a 6% ROI paid by Prosper.

Of course, doing so would bankrupt Prosper, but that isn't our problem.

ETA:  If I were a Florida lender, I would tender all of my defaulted, delinquent, and otherwise problematic loans from the Purchase Period back to Prosper, even if I wanted to keep my performing loans.  Of course, TINLA.

[Fred93]

So if Prosper is offering to repurchase all loans made by Florida lenders during a window of time in which its registration "inadvertently" lapsed, why isn't Prosper making the same offer to EVERY lender of its P 1.0 loans, considering that Prosper intentionally failed to register those with the SEC at all?

Guess the SEC wasn't as tough as Florida, eh?

I'll gladly trade my -2% ROI for a 6% ROI paid by Prosper.

I'd gladly trade my 1.5% ROI for a 6% ROI.  But how did they come up with 6%?  If I were a regulator I might have looked at all the public statements by prosper about ROI.  Weren't there lots of public statements about 9+% ROI on the web site, in the press, etc?  I must admit I didn't capture them all, so I don't know the whole history, but my memory is that there were many 9+% claims.

ETA:  If I were a Florida lender, I would tender all of my defaulted, delinquent, and otherwise problematic loans from the Purchase Period back to Prosper, even if I wanted to keep my performing loans. 

I doubt they will offer a selective tender. 

[ira01]

I'll gladly trade my -2% ROI for a 6% ROI paid by Prosper.

I'd gladly trade my 1.5% ROI for a 6% ROI.  But how did they come up with 6%? 

From the quote in the OP -- Florida is requiring Prosper to pay 6% annual interest on the rescinded notes, from the date of purchase through the expiration date. 

ETA:  If I were a Florida lender, I would tender all of my defaulted, delinquent, and otherwise problematic loans from the Purchase Period back to Prosper, even if I wanted to keep my performing loans. 

I doubt they will offer a selective tender. 

IMHO, that should be required (ditto for the class action).  Each loan was a separate transaction.  The lack of registration makes the loan purchases by lenders voidable, not void (lenders have the option of tendering the loans back or not).  Thus, each lender should be entitled to choose rescission on a loan-by-loan basis.  Is that unfair to Prosper?  WGAF -- that is entirely Prosper's fault, for selling unregistered securities.

Let's say that I sell you two paintings (in separate transactions), which I claim are valuable originals.  You sue me for fraud.  However, you discover that amazingly enough, one of the paintings really is a valuable original, while the other is a fraud.  Do you think that a court is going to make you rescind both sales?  Hell no.  You could keep the one painting, and rescind the purchase of the other one for fraud.  Why is Prosper any different?

[xraider]

I would happily allow Prosper to rescind all of my loans, as well, and take 6%.  Hell, I'll even give them back the bk in which they failed to file a timely proof of claim.

[rob11woods]

I'd gladly trade my 1.5% ROI for a 6% ROI.  But how did they come up with 6%?  If I were a regulator I might have looked at all the public statements by prosper about ROI.  Weren't there lots of public statements about 9+% ROI on the web site, in the press, etc?  I must admit I didn't capture them all, so I don't know the whole history, but my memory is that there were many 9+% claims.

What exactly do you mean by this?

[cubbiesnextyr]

I'd gladly trade my 1.5% ROI for a 6% ROI.  But how did they come up with 6%?  If I were a regulator I might have looked at all the public statements by prosper about ROI.  Weren't there lots of public statements about 9+% ROI on the web site, in the press, etc?  I must admit I didn't capture them all, so I don't know the whole history, but my memory is that there were many 9+% claims.

What exactly do you mean by this?

Which part?  The trading ROI part?  The part about Prosper's 9+% ROI claim?

[Fred93]

I'd gladly trade my 1.5% ROI for a 6% ROI.  But how did they come up with 6%?  If I were a regulator I might have looked at all the public statements by prosper about ROI.  Weren't there lots of public statements about 9+% ROI on the web site, in the press, etc? ...

What exactly do you mean by this?

I mean the 6% number seems arbitrary to me.  Some regulator came up with that number, but I wonder how.

Prosper was claiming 9+% returns in years past, when in fact their average invetor ROI was negative.  I could understand forcing them to pay what they claimed, but I don't understand 6%.

[ira01]

I'd gladly trade my 1.5% ROI for a 6% ROI.  But how did they come up with 6%?  If I were a regulator I might have looked at all the public statements by prosper about ROI.  Weren't there lots of public statements about 9+% ROI on the web site, in the press, etc? ...

What exactly do you mean by this?

I mean the 6% number seems arbitrary to me.  Some regulator came up with that number, but I wonder how.

Prosper was claiming 9+% returns in years past, when in fact their average invetor ROI was negative.  I could understand forcing them to pay what they claimed, but I don't understand 6%.

I assume that is Florida's standard post-judgment interest rate, or some such.

[no-whammies]

I assume that is Florida's standard post-judgment interest rate, or some such.

This sounds about right.   A guaranteed 6% return on all notes in the period given is hard to resist, I think I would choose to rescind.

[kenL]

Isn't 6% (or 0.5%/month) also what the IRS charges on your balance if you are late on taxes?

Seems like a standard government rate. The irony is that Prosper may even earn money on the deal. Oh wait, it's Florida, probably not.