A kwik-reference to key dates and events in the life of Prosper Marketplace Inc beginning with a sudden shut-down of operations in October of 2008.
— Registering with United States Securities and Exchange Commission (SEC)
— Resolving state sanctions promulgated by North American Securities Administrators Association (NASAA)
— Addressing grievances alleged by disenfranchised Prosper lenders (Class Action Lawsuit)
— Other surprises in the perpetual evolution of this upstart enterprise
This chronicle was originally posted to public view on a site called "SCP Prosper Investing and Finance Forum"
which went dark September, 2011 and no longer exists. The archive is presented here so its historical elements
are available to interested readers. Sections of superfluous material and known bad links have been redacted.
Where applicable links to additional information and event discussion that occured on this forum are inserted.
THE PROSPER "QUIET" DIARY• October 15, 2008; 4:43 AM PDT -- that was the moment Prosper turned out the lights and shut down the marketplace. This lender wondered what the sudden "Quiet" was all about.
• November 24, 2008 -- an investigation that began October 15th was concluded. The Securities and Exchange Commission (SEC) issued a public demand that Prosper cease-and-desist. Their loans were actually securities and they weren't licensed to sell them. Read the
SEC's Cease & Desist Order here.
• November 26, 2008 -- disenfranchised Prosper lenders filed motion for a class action lawsuit against Prosper in Superior Court, Los Angeles County, California. They saw an opportunity to recover capital lost to defaulted and charged-off loans.
• December 1, 2008 -- Prosper agreed to pay a $1 million penalty to the 50 states for violations pursuant to their federal breach of law. Few knew the states had been doing their own investigation. The federal decree spurred them to act.
Full explanation with updates here, other
discussion here.
• December 5, 2008 -- Prosper filed an all new proposal to sell regulated securities, loans now called notes, with the SEC. It was some 140 pages long. It was strikingly similar to LendingClub's proposal the SEC had approved the very week Prosper went quiet.
• January 7, 2009 -- the first courtroom appearance to hear the Class Action against the 'old' Prosper was postponed by the lenders/lawyers bringing the suit. The official start of a proceeding that promised to drag on for many months failed to occur. On the following day the case was assigned "Complex Litigation Designation" moving its future activity to a different 'department' in the courthouse.
• January 15, 2009 -- this lender 'quietly' marked 90 days in the darkness of a "Quiet" Prosper winter.
• January 16, 2009 -- Prosper filed a complete 'new' amended S1 form with the Securities and Exchange Commission. This was a follow-on to their December 5th document, the result of ongoing dialog between the two parties.
• February 11, 2009 -- the court case against the 'old' Prosper continued to trundle along. Prosper filed a "demurrer" challenging the legal sufficiency of the disenfranchised lender's claims. On February 26, 2009 a "1st Amended Complaint" was filed by the lenders.
• March 18, 2009 -- Prosper's first appearance in court for the Class Action Lawsuit didn't happen. Again.
• April 14, 2009 -- Prosper filed a 3rd Amended S1 Securities Registration Statement with the Securities and Exchange Commission. It contained revisions and clarifications required for SEC approval. The document was the culmination of dialog between the parties after the 2nd Prosper filing January 16, 2009.
• April 15, 2009 -- this lender 'quietly' marked 90 (+) 90 days in the darkness of a "Quiet" Prosper winter and saw his rosy predictions of an early springtime rebirth begin to wither. The April 14th event did provide new hope.
• April 15, 2009 -- the lawsuit against the 'old' Prosper continued to inch forward. Prosper filed written answers to the revised "Complaint" of February 26 and entered a protest on behalf of its Directors. Three court dates were pending.
• April 21, 2009 -- Prosper and the North American Securities Administrators Association (NASAA) finalized a template consent order, the framework for Prosper to pay up to $1 million in penalties to the individual States, as agreed last December, to resolve harm caused by their offer and sale of unregistered securities.
• April 25, 2009 -- an unusually "Quiet" weekend commenced. Prosper's website was offline for system upgrades and configuration changes all day-n-nite Saturday and Sunday. There was rampant speculation here and elsewhere. By Sunday evening the "Site Not Available" notice changed to say system upgrades were taking longer than expected. The 'darkness' continued thru Monday. On Tuesday morning Prosper reopened it's doors to California lenders only and to borrowers everywhere.
Discussion here.
• April 30, 2009 -- again with the disappearance of the first appearance of the Class Action Lawsuit in court. Actually, the litigation had yet to be recognized as a class action at this point.
• May 5, 2009 -- states began to enter Consent Orders (levy fines) related to the NASAA settlement agreement.
• May 07, 2009 -- an overbooked court docket caused Prosper's first meeting with the disenfranchised lenders to be delayed once more.
• May 09, 2009 -- the brief moment of Prosper sunshine that commenced April 28th suddenly disappeared behind a dark cloud. Prosper shuttered its California-only operation with an odd excuse, an apology, and a reference to ongoing registration efforts in Washington D.C. All was "Quiet" again.
Discussion here.
• May 21, 2009 -- there was a rustle in the quiet. Several states were satisfied with Prosper's proposals and approved the operation for their state ahead of SEC action.
• June 1, 2009 -- Prosper's put a 4th set of documents in front of the United States Securities and Exchange Commission. They filed another Amended S1 Registration Statement and associated exhibits dated May 29.
• June 11, 2009 -- for the very first time, a clutch of lawyers gathered before a judge in session in a courtroom in California to confer on matters related to the 'old' Prosper's alleged violation of securities laws. The very first turn of the great wheels of justice...
• June 26, 2009 -- Prosper filed proposal number 5 with the Securities and Exchange Commission. For the first time the package included direct testaments from Prosper's legal counsel, Morrison & Foerster. Since lawyers hesitate to bind their name to these sorts of things unless there can be no argument against their blessing, speculation was the SEC and Prosper had come to terms at last.
• July 9, 2009 -- Prosper presented a 6th set of basic registration documents to the Securities and Exchange Commission. A mere 12 days had passed since their 5th attempt.
• July 9, 2009 -- Prosper won a temporary reprieve from the Class Action Lawsuit in its second courtroom session with the disenfranchised lenders. It was short lived. Lenders filed a refreshed Complaint the next day.
continued....