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[msava]

It's not what I believe, it's what the judge will decide!

I think it's a given that how this plays out (including the scenario I posted) is speculation here at this point.
I would hope it's also a given that we all can live with that.

This settlement should never have been disclosed until all the detail (mainly how much would each lender receive) were ironed out.

[ira01]

It's not what I believe, it's what the judge will decide!

Doubtful.  Since this is a settlement, not a judgment, it's what the parties agree to.  The judge will simply be asked to bless the settlement as a whole, on a take-it or leave-it basis, as being fair and reasonable to the class. 

[ira01]

...and Prosper returning the full purchase price (plus interest) to the buyer. 

Well but if the settlement is for $10mil, then that's the cap (minus legal fees).  I haven't done the math, but it seems unlikely that the purchase price would ever be returned in full (much less interest too) for all rescinded loans. 

Yes, that is true.  But that's simply a function of the fact that a settlement usually never gives 100%, because then there wouldn't be a settlement.  By their very nature, settlements are compromises.  The Plaintiffs get less than they would with a complete victory, but more than they would if they lost.  And the same for the defendants. 

Thus, buyers can keep their performing loans, and only rescind their defaulted loans. 

...some folks (like xraider?) might argue that even performing portfolios are "damaged" because their ROIs would have been higher had the loans been registered.

IOW, if you're going to argue that portfolios took a hit because the loans weren't registered, then you need to say that ALL portfolios - red or green - took a hit.  And once you do this, splitting that $10mil proportional to lender outlays - including to lenders with performing loans - is the only equitable approach I can think of.  If that were to happen, lenders in the red would be less red (or green) and lenders in the green would be more green - which, again, strikes me as fair.

Except that any given loan either paid in full or it defaulted.  If it paid in full, then the lender got exactly what he bargained for, so had no loss (on that loan), unless you are going to argue that the interest rate would have been higher had Prosper provided more accurate information about the risks.  But given the bidding frenzies that used to take place, I doubt that is the case. 

If a loan defaulted, then depending on the timing of the default and the interest rate, the lender either lost money or he/she didn't (taking into account statutory interest on the loan).  In the latter case, again there is no loss to the lender, so the lender would not choose to tender the loan back to Prosper for rescission.  Only in the former case, where the loan defaulted early enough (and/or was at a low enough interest rate) for the lender to lose money would the lender choose to tender the loan back to Prosper for rescission.  So perhaps the $10M should be divided pro rata based only on such loans.  Of course that may be administratively difficult.

Put another way, let's take the case of a hypothetical lender who made two $25K loans at 15%, both of which paid in full as agreed.  It isn't clear to me why that lender should receive anything from the settlement, because he/she suffered no loss from Prosper's illegality.  To the contrary, he/she made a tidy profit already on the loans. 

[xraider]

Ira, I agree with your last point.  I think the settlement distribution should be linked to damage.

My point about MuleShoes was, as Ira said, that maybe (speculation) disclosures would have prevented some bad decisions.

MsA, I have no idea why the amount of the settlement was released (or who it was released to) without the details.  But, as Ira has pointed out, we will all have the opportunity to opt out if we don't like the settlement. 

[NewHorizon]

...unless you are going to argue that the interest rate would have been higher had Prosper provided more accurate information about the risks.  But given the bidding frenzies that used to take place, I doubt that is the case. 

But aren't you saying, then, that SEC-registered bid-able loan offerings were/would be no less susceptible to "bidding frenzies" than the P1.0 loans...?

That's nigh on impossible to (dis)prove.  But, if I may, I wouldn't have expected to hear this from a P1.0 lender.

[ira01]

MsA, I have no idea why the amount of the settlement was released (or who it was released to) without the details. 

Prosper released it in an SEC filing.

But, as Ira has pointed out, we will all have the opportunity to opt out if we don't like the settlement. 

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?

[Staneslav]

a

[NewHorizon]

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?

One of these days, perhaps in our lifetime, somebody will make an app which allows all class members from any given lawsuit to communicate and coordinate with the whole group.

[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!

[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?

[ira01]

But, as Ira has pointed out, we will all have the opportunity to opt out if we don't like the settlement.  

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?

If enough people opt out, can a second class action be filed?

I'm not positive, but I don't see why not, at least theoretically.  Anyone who opts out is NOT prevented from bringing a new suit (despite Beerbud's drivel to the contrary), and the statute of limitations is tolled during the pendency of the class action, so that isn't a problem either, and I see no reason why they couldn't band together into a new class action, in theory.  My guess, however, is that won't happen, because most attorneys wouldn't be interested in taking such a case, figuring that the potential payoff is a whole lot less, thanks to the much smaller new class than the original class.  So as a practical matter (as opposed to a legal one), this settlement will likely be it, except if the settlement itself goes kablooee because of a very large number of opt-outs (most class action defendants insist of a provision in a settlement agreement that if the number of people opting out exceeds some level, than the settlement is off, probably because the chances of subsequent suits increases as the number of opt-outs does). 

[Beerbud1]

Can't win on merits so the usual format is to attack the character of the person who's beating you,
Sad when you think about it, but par for the course for you!

[ira01]

Can't win on merits so the usual format is to attack the character of the person who's beating you,
Sad when you think about it, but par for the course for you!

Actually, I did win on the merits.  And it isn't my fault that your character has so many flaws.  But given that this is the Lobby, where discretion is supposed to prevail, this will be my last response here about you.  Now let the grownups discuss these important matters.

[Staneslav]

a

[moremoneymarc]

Obviously we do not have the discovery details about the exact cash positions and insurance provisions of P. that class counsel might have.  I've been told by an accountant that class action lawyers often go for low hanging fruit which is often the amount of free cash available and what insurance will pay.

 Considering though that the claim of selling unregistered securities has apparently not been disputed effectively it would seem that getting the majority of the actual losses would be sort of slam dunk.  What I don't know though is how much of any remaining assets could be essentially burned up before actual release if P wished to pursue a scorched earth policy.

I am certainly willing to assume that we are being represented well.  My experience with multiple class action lawsuits is it is more about attorney profits than recovery of losses in the USA.  My only satisfying class action result occurred in the Canadian courts.  The recovery for the plaintiffs significantly dwarfed the amount that the attorneys took, and their fees were outside of the damages that occurred if I remember correctly.

Also if I remember correctly the Canadian courts did not make me prove the ownership of every item but took the word of whomever keeps the formal stock ownership list by dates.