Prosper
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Prosper ran an online peer-to-peer lending marketplace where individual borrowers listed loan requests and individual lenders funded them, with rates set by auction. Launched in 2006 in San Francisco, it was the first US marketplace to let ordinary people lend directly to other people instead of going through a bank.
02 / Prosper FAILURE REASONS
Failure reasons
Prosper was shut down by the regulator, not by lack of demand. The SEC ruled in November 2008 that loans arranged on its platform were unregistered securities, ordering the company to stop selling them. Prosper had operated since 2006 under the belief that it was only a marketplace matching lenders and borrowers, a view the SEC rejected. The cease-and-desist forced a nine-month halt in new lending.
03 / EVENT HISTORY
Events in the structured record
- Company founded
Prosper launched its peer-to-peer lending marketplace from San Francisco, letting individuals bid to fund borrowers' loan requests.
- Operations ended
Prosper stopped new lending in October 2008; the SEC issued a cease-and-desist order in November 2008, finding its loans were unregistered securities.
- Restructuring completed
After registering its notes with the SEC, Prosper reopened for lending and borrowing in July 2009 under securities regulation, surviving the shutdown.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
Launch the first US peer-to-peer lending marketplace in 2006.
- 02
Operate for two years treating loans as mere marketplace transactions.
- 03
Have the SEC rule the loans are unregistered securities and order lending stopped.
- 04
Halt new lending for nine months, register with the SEC, and relaunch in July 2009.