Print

[Investar]

Introduction to state settlements discussed in other threads 

On December 1, 2008, the North American Securities Administrators Association (NASAA) announced that state securities regulators had reached a settlement in principle with Prosper Marketplace. “The notes issued by Prosper are securities, but since Prosper’s activity began in 2006 these securities were not properly registered,” said Fred Joseph, NASAA President and Colorado Securities Commissioner. Prosper signed the agreement on November 25, 2008.

Under terms of the settlement Prosper agreed not to offer or sell any securities in any jurisdiction until they had come into compliance with that jurisdiction’s securities registration laws. Prosper agreed to pay a fine totaling $1 million to the states to resolve the alleged violations. States who join in the settlement agreed to terminate their investigation.

On April 21, 2009, Prosper and NASAA finalized a template consent order, the plan under which Prosper would pay penalties to the 50 individual states. The $1 million aggregate was allocated among the states based on the volume of promissory notes Prosper sold in each state. NASAA recommended that the states adopt the framework but states remained free to seek their own recourse independently. The template set no deadline for states to decide whether to enforce the consent order. Prosper was exempt from paying amounts alloted to a state if that state did not participate in the group settlement.

Prior to the 50-state decree several states had been investigating Prosper’s activity and were considering or preparing enforcement actions. A working group involving state securities regulators from approximately 20 states had formed earlier in 2008 to seek a collaborative approach. In the wake of Prosper's shut down by federal regulators on October 15, 2008, the consortium suspended their query and promulgated the NASAA solution. State-by-state action that began in May 2009 is being announced on this forum as it becomes evident.


Sources:
NASAA Newsroom
http://www.nasaa.org/NASAA_Newsroom/Current_NASAA_Headlines/9906.cfm
Prosper "Quiet" Diary
http://www.prospers.org/forum/the_prosper_quiet_diary_millstones_and_milestones-t25453.0.html
United States Securities and Exchange Commission
http://www.sec.gov/cgi-bin/browse-edgar?NONOaction=getcompany&CIK=0001416265
Pro$pers.org
http://www.prospers.org/forum/nasaa_announces_national_settlement_with_prosper_marketplace_inc-t10991.0.html

[Investar]

Discussion available concerning the following states:

Alabama - $5,073
Prosper's settlement with Alabama

California - $ 0.00
Prosper's Settlement with California?
California regulators declared no violation of their state law had occurred

Colorado - $19,900
Prosper's settlement with Colorado

Connecticut - $12,602
Prosper's settlement with Connecticut / Michigan

Florida - $56,364
Prosper Settles With the State of Florida...

Iowa - $5,146
Prosper's Settlement with Iowa

Kansas - $5,311
Prosper's Settlement with Kansas

Kentucky - $4,776
Kentucky at forefront of NASAA settlement
Prosper’s Kentucky Adventure (PCASM)

Maryland - $28,706

Maine - $1,517
State of Maine Office of Securities (.GOV)

Michigan - $20,461
Prosper's settlement with Connecticut / Michigan

Missouri - $9,228
The State of Missouri Sanctions Prosper (PCASM)

Montana - $2,214
Montana's auditor is no friend of Prosper
Prosper's Settlement with Montana

New Jersey - $34,157

North Dakota - $906
Prosper's settlement with North Dakota

Ohio - $18,868
Prosper's Settlement with Ohio

Oregon - $15,000
Prosper's Settlement with Oregon

South Carolina - $6,612

Tennessee - $8,461
Prosper's Settlement with Tennessee

Washington - $36,025
Prosper's Settlement with Washington State

Wyoming - $803
Prosper's Settlement with Wyoming

[Investar]

I have updated the table of state discussions available. By September 30, 2009 (25) states had prescribed their verdict on the 'old' Prosper using the NASAA protocol, (18) of which are included on our roster. According to Form 10-Q disclosure by Prosper, two states not (yet) known to us completed their sanction process in May or June and issued penalties totaling $10,181. Five additional states who remain unnamed completed their sanctions in July, August and September. Extrapolated data shows these five apparently issued penalties totaling $82,484. Prosper said total payments were $325,320 to date. 

[Investar]

Thought I'd look in on the progress and update this thread for posterior or posterity as the case may be (grin). As of March 31, 2010, Prosper said the company had entered into 28 consent order agreements and paid an aggregate of $390,712 in penalties. We have the rundown on 21 of the 28.

LATEST FINDS: Maryland, New Jersey, South Carolina
--> PDF of South Carolina's Order
--> PDF of New Jersey's Order
--> PDF of Maryland 's Order

[mothandrust]

Total Settlement Money Distributed to Lenders: $0.00

[blue]

Any further predictions on the status change of the UnLending States?

[Investar]

Any further predictions on the status change of the UnLending States?

With the possible exception of West Virginia, all's aboard that's comin' aboard. You can review "Prosper 50 State Progress" and see the predictions I made way back in the "quiet" period were accurate in the majority. I'd submit that securities regulators in the 23 outcast states have stonewalled the lending side because it is currently tied to the trading side and they don't like any of it. Doesn't fit their state's rules. So we're all done, all thru, unless….

On May 14 the U.S. Senate passed its version of financial regulatory overhaul that, among many other things, creates a new consumer regulatory agency at the Federal Reserve. No confirmation Prosper will be able to thread the needle here and get bidding and funding regulated by this new agency within the Federal Reserve (it's one of the things Podesta Group was hired to work on). If so, such a change could move control of the main P2P platform away from the SEC and hence, away from securities regulators in the 50 states. The Senate still needs to reconcile its bill with the one passed by the House in December so it'll be awhile longer until we know how this plays out.