Peer-to-peer lenders frozen by the SEC on clarkhoward.com

Prosper is in a state of loan lockdown as the Securities and Exchange Commission scrutinizes the site to determine if it is illegally selling unregistered securities.

Regular listeners of the show will know that Prosper is one of a dozen or so "peer-to-peer" lenders. P2P lenders allow people to leverage the power of the Internet to make loans and borrow money from each other directly without the interference of banks.

Clark finds it unbelievable that federal regulators found time in their busy schedules -- in the midst of everything going on in our country right now -- to monitor Prosper. After all, the site isn't doing anything differently this year than it has been in the past.

So for the moment, Prosper is forbidden from making any new loans. If you have an existing loan administered by them, you still must repay on it. Incidentally, The New York Times reports Prosper's rate of default is around 30%, according to one lender cited by the paper.

Clark believes the P2P lending business model can't be crushed by some corrupt regulators. He vows to follow this story because he thinks it's just atrocious. Maybe Clark's paranoid, but this development seems way too weird with everything else going on in our economy right now.

What others are saying

Propser
I believe prosper is having real issues. As of today you have to wait until you have accumulated $25.00 in your account before you can transfer it out. Before it was any amount. When my money is out I'm done with those people.
By Ryan @ 07/15/09 10:39:09 AMreport abuse
peer lending
I have after 15 years the importance of paying off all of my debts. I purchased a home in 1994 with a 4% fixed 30 year mortgage. I want to pay of some high interest loans that I have. I have a good job and with a lower payment it takes the stress off and helps to rebuild my credit.
By sonya hicks @ 02/19/09 07:06:13 AMreport abuse
I need help
I guess I am to late I need a loan like this
By mark @ 01/04/09 09:29:18 PMreport abuse
next?
what next? will they start regulating vinnie the loan sharks deals? becasue you know those loan sharks don't keep very good records and sometimes they change the terms without notice...we should really waste the resources of the banking regulators with stuff like this , it's not like they have anything better to do at this time.......grrrr
By Dave @ 10/18/08 12:40:10 PMreport abuse
prosper lender
Prosper Filing Registration Statement; Enters Quiet Period

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.
By Calvin @ 10/18/08 12:19:13 AMreport abuse
What do you mean Clark. I thought you would just love having the government intervening into everything. We certainly don't want Prosper going bell up. You would probably want a bailout for them too.
By Peacock @ 10/17/08 06:55:28 PMreport abuse
Peer-to-peer lending
Why not just take the business to another country.
By PJ @ 10/17/08 04:29:35 AMreport abuse
Prosper says:
"Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant"
By kelin m. @ 10/16/08 06:29:58 PMreport abuse

Propser

I believe prosper is having real issues. As of today you have to wait until you have accumulated $25.00 in your account before you can transfer it out. Before it was any amount. When my money is out I'm done with those people.

By Ryan @ 07/15/09 10:39:09 AMreport abuse

peer lending

I have after 15 years the importance of paying off all of my debts. I purchased a home in 1994 with a 4% fixed 30 year mortgage. I want to pay of some high interest loans that I have. I have a good job and with a lower payment it takes the stress off and helps to rebuild my credit.

By sonya hicks @ 02/19/09 07:06:13 AMreport abuse

I need help

I guess I am to late I need a loan like this

By mark @ 01/04/09 09:29:18 PMreport abuse

next?

what next? will they start regulating vinnie the loan sharks deals? becasue you know those loan sharks don't keep very good records and sometimes they change the terms without notice...we should really waste the resources of the banking regulators with stuff like this , it's not like they have anything better to do at this time.......grrrr

By Dave @ 10/18/08 12:40:10 PMreport abuse

prosper lender

Prosper Filing Registration Statement; Enters Quiet Period

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.

By Calvin @ 10/18/08 12:19:13 AMreport abuse

What do you mean Clark. I thought you would just love having the government intervening into everything. We certainly don't want Prosper going bell up. You would probably want a bailout for them too.

By Peacock @ 10/17/08 06:55:28 PMreport abuse

Peer-to-peer lending

Why not just take the business to another country.

By PJ @ 10/17/08 04:29:35 AMreport abuse

Prosper says:

"Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant"

By kelin m. @ 10/16/08 06:29:58 PMreport abuse

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Oct 16, 2008 -- Peer-to-peer lenders frozen by the SEC

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