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Prosper Class Action Suit Settled for $10 Million Over 3 Years

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nonattender:
Blog post from LendAcademy:  http://www.lendacademy.com/class-action-lawsuit-against-prosper-has-been-settled/

Link to the 8-K filing via SEC:  http://www.sec.gov/Archives/edgar/data/1416265/000141626513000504/p8k7d19d2013.htm

Nominate for Lobby.

Xenon481:
Second

Xenon481:

--- Quote ---PMI agreed to pay settlement consideration in the total amount of $10 million according to the following schedule: (i) $2 million within 10 days of entry of an order by the Court granting preliminary approval of the settlement (“Preliminary Approval”); (ii) $2 million on the one-year anniversary of Preliminary Approval; (iii) $3 million on the two-year anniversary of Preliminary Approval; and (iv) $3 million on the three-year anniversary of Preliminary Approval.

--- End quote ---

As of March 31st, 2013 (the latest released 10-Q), Prosper had "Cash and Cash Equivalents" of $19,983,593.

Prosper has to pay $2million essentially immediately which is ~$10+% of their cash reserve. That's a significant hit, but possibly less than they would have had to pay in legal fees to continue fighting the lawsuit.

$10million is ~22% of what the class was seeking.

ira01:
$10 million is a lot of money.  Stretching the payments over 3 years is somewhat troubling, though, unless the individual defendants had to give personal guarantees -- did they?

ETA:  At least the time periods supposedly run from the order granting preliminary approval (assuming Peter got that detail right), which will likely be in a few months, and not from final approval, which could be years from now if any objectors appeal the settlement.

xraider:
Interesting.  I wonder if we'll be paid off on the same schedule as our loans. Will Doug Fuller lend his expertise if Prosper defaults?

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