SEC Filing By Prosper Hints At Secondary Market

Prosper seems to be setting up for a secondary market. This has been a major topic in the Prosper forums from almost the beginning. View the entire article


Key Points in SEC filing

"Prosper is not obligated to repurchase a Note from a Lender if his or her investment is not realized in whole or in part due to fraud (other than verifiable identity theft) in connection with a listing or due to false or inaccurate statements or omissions of fact in a Borrower’s listing, whether in credit data, Borrower representations, user endorsements, group affiliations or similar indicia of Borrower intent and ability to repay the Notes. If Prosper repurchases a Note, the outstanding principal balance will be returned to the Lender."

"The Platform may fail to comply with borrower protection laws such as state usury laws, other interest rate limitations or federal consumer protection laws such as the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. Borrowers may make counterclaims against us, any collection agency or you after collection actions have commenced."

"

Risks Related to Our Ability to Service the Notes

We have a limited operating history. As an online company in the early stages of development, we face increased risks, uncertainties, expenses and difficulties."

"Notes. If we are unable to increase the capacity of the Platform and maintain the necessary infrastructure, you may experience delays in receipt of payments on your Notes and periodic downtime of our systems."

"

We are subject to extensive federal, state and local regulation. There can be no guarantee that we will be able to continue our servicing obligations.

We are subject to extensive federal, state and local regulation, non-compliance with which may expose us to adverse consequences. Additionally, new laws and regulations could be enacted that could have a negative impact on our ability to service the Notes, provide a resale market for the Notes, or maintain the Platform. We could suffer adverse consequences if we were to fail to comply, even inadvertently, with these laws and regulations.

Additionally, we are licensed as a finance lender under the California Finance Lenders Law and are regulated and examined by the California Department of Corporations. We hold similar lending licenses or authorizations in 24 other states, which also supervise and examine our activities. If we do not comply with applicable laws, we could lose one or more of our licenses or authorizations, which may have an adverse effect on our ability to continue to perform our servicing obligations or to maintain the Platform. See “Description of the Securities – Regulatory Matters – Licensing and Consumer Protection Laws” beginning on page 41 for more information regarding governmental regulation of the Platform.

The federal Fair Debt Collection Practices Act and similar state debt collection laws regulate debt collection practices by “debt collectors” and prohibit debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans. For example, debt collectors are prohibited from contacting debtors at unreasonable times, revealing or discussing the nature of the debt with third parties, making false representations in association with efforts to collect the debt, seeking collection fees or other charges not permitted under contract or by state law, making threats of arrest or legal action without actual intention of action on the threat, and using abusive or profane language in the course of collection on the debt. While Prosper obligates its collection agencies to comply with applicable law in their efforts to collect Loans made on the Platform, it is possible that improper collection practices may occur which could adversely impact the collectability of particular Loans originated through the Platform."

"We may not realize enough fees from our services to offset the cost of maintaining the Platform. In the event that we should fail to maintain operations, you may experience a delay in realizing your investment or an inability to resell the Notes or Borrowers may default on their Notes."

"In most instances, Prosper does not verify the income, employment and occupation or other information provided by Borrowers in listings. The Borrower’s income, employment and occupation is self-reported, and the Borrower’s DTI is derived by Prosper from a combination of the Borrower’s self-reported income and information from the Borrower’s credit report. The credit data that appears in listings is taken directly from a credit report obtained on the Borrower from a credit reporting agency, without any review of verification by Prosper."

Credit Grade

AA

A

B

C

D

E

HR

Experian Scorex PLUSSM Credit Score

760 and up

720-759

680-719

640-679

600-639

560-599

520-559