Question on this - What remedy have the plaintiffs asked for in this suit? Buy back all loans from the stated period or just loans that went bad? Since I ended up being positive and all my loans are from the stated period. Selling all loans back (including interest?) would cost me money though just the loans that went bad would be a net gain? Realizing what the plaintiffs ask for and what they get could be very different.
IMHO, the proper remedy would be to allow every lender to choose which of their P1 loans they want to rescind and force Prosper to repurchase (for the remaining principal plus interest), only those loans. The reason I think that is the proper remedy, is that it appears that selling an unregistered security makes the sale voidable, but not void. That means that the buyer gets to choose, on a purchase by purchase basis, whether to void each sale. I see no good reason to require lenders to choose "all or nothing," because each loan purchase was a separate transaction.
And reading earlier, I also realize a Prosper bankruptcy would likely mean I would see nothing.
Not necessarily, for at least two reasons. First, Prosper has assets. They have some VC cash in the bank, which would clearly be reachable by prevailing class members. And Prosper also has an enormous pool of P3 loans, which (unlike P1 loans, which were actually owned by lenders) are all owned by Prosper. P3 "lenders" are basically unsecured creditors of Prosper, just like a victorious class would be. So all the incoming loan payments should probably be divided on a pro rata basis between ALL of Prosper's unsecured creditors.
Second, Prosper is not the only defendant in the class action lawsuit -- a number of individuals have been named as defendants, including a variety of Prosper's officers and directors (some of whom are very wealthy). Some of those individual defendants already tried to get themselves dismissed from the case, but the California Court of Appeal ruled against them.
As always, nothing in this post (or any other post) should be construed as legal advice -- it is just an interesting internet discussion.
