Prosper P2P Loans Class Action Settlement

P2P lender Prosper.com was sued because the defendants “allegedly violated securities laws due to Prosper’s selling securities without qualifying or registering them and acting as an unlicensed broker-dealer” (they later registered with the SEC). I was just notified that the case was settled without admission of wrongdoing for $10 million (1/3rd will go to lawyers of course). Details at ProsperClassAction.com.

You are eligible for a portion of this settlement if you purchased notes from Prosper between January 1, 2006 and October 14, 2008. This period is sometimes referred to as “Prosper 1.0″. You used to be able to bid on loans, and many early investors lost money while this new model was being tested out (their loan collection methods back then were horrendous). Accordingly, settlement payouts will be made “in proportion to the aggregate amount of losses”.

It appears that you don’t have to file a claim to get your share of the settlement. However, if you have changed e-mails since buying since investing in a Prosper loan, you may not have gotten this notice. Also, if you moved you should update your address on record to make sure you get that check.

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