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[xraider]

From what I remember, this is far beyond Prosper's insurance.  This is coming out of Prosper's pocket, and not out of insurance.

I would expect that Prosper's policy had a burning limit - the money spent on defense was deducted from the money available for indemnity and IIRC, the limit was either $1 or $2 million.  (Anyone?)

Here, we have really good records of which of our loans went south - and Prosper can't dispute those records.

I still think that Prosper is looking to borrow the money to pay off the settlement through shell borrowers, which is why the class payoff is the same 3 years as the loan terms.   

[ira01]

From what I remember, this is far beyond Prosper's insurance.  This is coming out of Prosper's pocket, and not out of insurance.

I would expect that Prosper's policy had a burning limit - the money spent on defense was deducted from the money available for indemnity and IIRC, the limit was either $1 or $2 million.  (Anyone?)

Yes, that is what I remember too.  IIRC the limit was $2M, which was exhausted long ago. 

[mothandrust]

Would like to see the class lawyers take this to trial and get the full $47M from Prosper.

But since I don't have hundreds of thousands of dollars to hire a lawyer and start from square one with a lawsuit of my own, I'll have to take what the current actions gives me.

[msava]

Here is what was said yesterday by Ira:

Class members who opt out are no longer class members, and are not bound by the settlement.  That is what it means to opt out. 

Meaning they could potentially create their own class or sue individually!

Here is what he (Ira) is saying today:

Yes, but that will be pretty useless unless so many people opt out that it torpedoes the entire settlement, because who is going to bring an individual action?

What he is not telling you and the point I was trying to make yesterday, is that Prosper and the Courts will not allow a second or subsequent suits. No one is going to bring a suit individually because of cost of Attornies fees and any Experienced "CLASS" attorney would tell you/them that you can't, you shouldn't have opted out, which is the point I was trying to make yesterday!

Beerbud, since you know nothing (which is part of the reason yo were removed as a class representative in this case), why don't you just STFU already?

That's another thing I find troubling...what right do they have from removing someone from the case? BB may not have the legal mind of Xraider and Ira, but he sure as heck knows what we average people feel and expect/want. Not knowing anything about class actions, what perks do class representatives receive that other members don't?

[Beerbud1]

Here is what was said yesterday by Ira:

Class members who opt out are no longer class members, and are not bound by the settlement.  That is what it means to opt out. 

Meaning they could potentially create their own class or sue individually!

Here is what he (Ira) is saying today:

Yes, but that will be pretty useless unless so many people opt out that it torpedoes the entire settlement, because who is going to bring an individual action?

What he is not telling you and the point I was trying to make yesterday, is that Prosper and the Courts will not allow a second or subsequent suits. No one is going to bring a suit individually because of cost of Attornies fees and any Experienced "CLASS" attorney would tell you/them that you can't, you shouldn't have opted out, which is the point I was trying to make yesterday!

Beerbud, since you know nothing (which is part of the reason yo were removed as a class representative in this case), why don't you just STFU already?

That's another thing I find troubling...what right do they have from removing someone from the case? BB may not have the legal mind of Xraider and Ira, but he sure as heck knows what we average people feel and expect/want. Not knowing anything about class actions, what perks do class representatives receive that other members don't?

MsAva I was removed from the case because of the personal dispute with my wife. since it became public I had no choice but to inform the attorney's. They had no choice but to inform the defendants attorney's. The defendants attorney's did and would continue use that unfortunate incident as a distraction to divert attention off of the defendant's actions onto me and my unfortunate behavior. Although my wife and I are reconciling after a full 2 years apart. You know who wants to think I'm a dummy because I don't always say things as eloquently as others. Although I do not have a Law degree, I am pretty aware and informed. I may not phrase it the best always but I do know whats going on. I know more about the CASE than you know who but SIGNED  a confidentiality AGREEMENT. Therefore I cannot disclose what I know. I have been wrong about a few things but thats because Judge's have been changed in the case.

[ira01]

Here is what was said yesterday by Ira:

Class members who opt out are no longer class members, and are not bound by the settlement.  That is what it means to opt out. 

Meaning they could potentially create their own class or sue individually!

Here is what he (Ira) is saying today:

Yes, but that will be pretty useless unless so many people opt out that it torpedoes the entire settlement, because who is going to bring an individual action?

What he is not telling you and the point I was trying to make yesterday, is that Prosper and the Courts will not allow a second or subsequent suits. No one is going to bring a suit individually because of cost of Attornies fees and any Experienced "CLASS" attorney would tell you/them that you can't, you shouldn't have opted out, which is the point I was trying to make yesterday!

Beerbud, since you know nothing (which is part of the reason yo were removed as a class representative in this case), why don't you just STFU already?

That's another thing I find troubling...what right do they have from removing someone from the case? BB may not have the legal mind of Xraider and Ira, but he sure as heck knows what we average people feel and expect/want. Not knowing anything about class actions, what perks do class representatives receive that other members don't?

Class representatives generally get a small payment for the time and effort they put into the case -- typically around $5,000 or so.  Other than that, they get no special "perks." 

[havastat]

Only because of the lawsuit.. the stated violation was selling illegal securities, not that some lenders lost more or less than others as the result of that illegal action.

Even those who MADE money on the security were still sold illegal securities, and so those lenders should also be compensated... again, because the violation was selling illegal securities.

That's true, but ignores the fact that the legal remedy for purchasing unregistered securities is rescission.  That means that the sale of an unregistered security is voidable by the buyer, and the remedy is that he/she is entitled to undo the sale and get their money back.  That would suggest that a distribution based on dollars is more fair than one based on loan count.  

It seems to me the recission theory justifies recovery based on dollars lost. Recision turns back the clock and makes people as if the transaction had never happened. Voiding the transaction means that those wishing to rescind their loans not only get their money back, but also need to give back their payments to make things totally as they were before the transaction happened. This means it wouldn't be rational for people who came out positive on a loan to want to rescind that loan.. They would lose money by doing so. Only loans that lost money would be eligible for damages, and only to the extent of the loss.

The court might go further and say people have to rescind everything or nothing, and can't choose to rescind only the losers and keep the winners. Doing this would base damages on ones portfolio as a whole, so that profitable loans offset losing loans.

[ira01]

Only because of the lawsuit.. the stated violation was selling illegal securities, not that some lenders lost more or less than others as the result of that illegal action.

Even those who MADE money on the security were still sold illegal securities, and so those lenders should also be compensated... again, because the violation was selling illegal securities.

That's true, but ignores the fact that the legal remedy for purchasing unregistered securities is rescission.  That means that the sale of an unregistered security is voidable by the buyer, and the remedy is that he/she is entitled to undo the sale and get their money back.  That would suggest that a distribution based on dollars is more fair than one based on loan count. 

It seems to me the recission theory justifies recovery based on dollars lost. Recision turns back the clock and makes people as if the transaction had never happened. Voiding the transaction means that those wishing to rescind their loans not only get their money back, but also need to give back their payments to make things totally as they were before the transaction happended. This means means it wouldn't be rational for people who came out positive on a loan to want to rescind that loan.. They would lose money by doing so. Only loans that lost money would be eligible for damages, and only to the extent of the loss.

Yes, I think this is basically correct (although interest affects it a bit -- in theory, someone with a good loan that paid as agreed, but which was at an interest rate below the statutory rate that would be due on rescission might also choose to tender back the loan).  In fact, I think I said the same thing above.

The court might go further and say people have to rescind everything or nothing, and can't choose to rescind only the losers and keep the winners. Doing this would base damages on ones portfolio as a whole, so that profitable loans offset losing loans.

That's possible, but I think unlikely.  Each loan purchase is a separate (and separately illegal) transaction, so the buyer should be able to pick and choose.  Of course just because I think that would be the rule for a judgment doesn't necessary mean that should be the rule for a settlement, where by definition the pot of available money is less than the total losses. 

[NewHorizon]

In a boon for the mortgage lending industry, the 7th Circuit has ruled that the Truth in Lending Act does not allow for rescission of mortgages on a class action basis. The court said the "personal character of the [rescission] remedy makes it procedurally and substantively unsuited to" class actions.

http://www.law.com/jsp/article.jsp?id=1202424898392&

(Viewing this excerpt is free.  Registration on the web site required to view the entire article - which I didn't do.)

Mortgages and Prosper loans are in many ways two different animals.  But still, I should think the judge will need to be convinced from the laws that loan rescission is indeed the proper remedy.  Absent a really convincing argument along those lines based in law, and given the greater complexity of the procedures to do rescissions, me-thinks they're just going to do the standard thing - send out checks.

(ETA: Don't get me wrong.  Loan rescission in some form or another strikes me as a just and fair way to "undo" selling unregistered securities.  But for myself, I just don't see it happening.)

[havastat]

I suspect that's one of the reasons the plaintiffs decided to bring their suit in the California state courts, rather than the federal courts, in the first place.

The settlement indicates the class will get some money, but doesn't say how the $10M, less attorney's fees, will be divided up. There isn't enough money to actually rescind everything. But the recision rule may influence how the pot gets divided.

[moremoneymarc]

Do you suppose the SEC will have to sign off on the settlement proposal as well? 

[Beerbud1]

Do you suppose the SEC will have to sign off on the settlement proposal as well? 

No!

[msava]

What's the earliest we can expect to see money? Also, for those of us with large losses, will the settlement money be taxable, assuming we get more than $50 bucks

[ira01]

What's the earliest we can expect to see money?

That's not yet known, but I wouldn't count on it coming too soon if I were you.  According to Prosper's public statements, the first installment is to be paid shortly after the judge gives preliminary approval.  However, I'm skeptical that is correct, because preliminary approval is not even close to the end of the process, and I can't imagine Prosper would pay $2M on a settlement that could easily blow up after the payment.  Typically, payments do not commence until after FINAL approval, including any appeals. 

Preliminary approval could possibly come several weeks after a settlement agreement is fully drafted and agreed upon by the parties (which will likely take several months).  So I doubt preliminary approval will be sooner than 3 months, and may well be substantially longer -- that mostly depends on how close the parties are to hammering out the details of the settlement agreement.

Final approval in the trial court is likely to be at least several months after preliminary approval -- notice will have to be given to the class, time provided for objections and opt-outs, and a court hearing held.  And if anyone appeals approval of the settlement, that appeal would likely take 18 months or so (and the losing party could appeal again to the CA Supreme Court, although it accepts few cases, so that likely would add only a few months). 

Also, for those of us with large losses, will the settlement money be taxable, assuming we get more than $50 buck.

I'm pretty sure it would be.  After all, you already deducted your losses, so if you now get partially reimbursed, I don't see why that wouldn't be taxable.  But Cubbies can provide a more definitive answer. 

[cubbiesnextyr]

Also, for those of us with large losses, will the settlement money be taxable, assuming we get more than $50 buck.

I'm pretty sure it would be.  After all, you already deducted your losses, so if you now get partially reimbursed, I don't see why that wouldn't be taxable.  But Cubbies can provide a more definitive answer. 

Any settlement you receive should maintain the same character as the underlying source would have.  So, if you have deducted your losses as long-term capital losses, you would pick up the settlement as LTCG.  If you took them as short term capital losses (which is how I would have suggested that they have been reported due to their nature as non-business bad debts), than you should pick it up as STCG.  If you didn't write off the losses yet, then it would be considered a repayment of principal and not taxable, though it would decrease your basis so that any future write-off would be lower.

The dollar amount doesn't impact it's tax-ability, so if it would be taxable to you if it was $1,000, it's taxable to you if it's $2.