Saturday, October 25, 2008

Prosper Goes Quiet

This evening, I decided I would log in and check on my current portfolio of prosper loans. Not long ago, I railed against prosper and now it appears that there is definitely something big going on over at prosper. The message from their website:

start of message
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.

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. As the appropriate securities authorities may consider a new loan listing to constitute the offer of a security, we are unable to post new loan listings on our site until our registration statement becomes effective.

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.

end of message

So after reading this short, relatively vague explanation, it makes me really curious as to what they are actually doing. It is not entirely clear if this site is going to start offering different kinds of loans like bonds or what. But I definitely think that there is something big going on and I think that the need for secrecy seems rather odd. In the end, I have to wonder if there isn't something a little more sinister going on here? Like perhaps being bought/influenced by some big bank or hedge fund that actually owns the company and is perhaps now cash-strapped?

I have no information or real idea about what the state of prosper is as a company, but a cryptic message like this really does not help the average lender and I'm disappointed. In this economy, I expect companies that are responsible for literally tens and hundreds of thousands of dollars to keep customers well informed. That announcement above is not clear and we can do nothing but wait.

Regardless of what happens, I've already lost too much money in prosper and I'm starting to withdraw money now. And this announcement makes me even more comfortable with that position? I mean, what feels more safe to me? Money invested in signature loans over the internet or money at my brick-and-mortar bank where I can talk to a teller in person?

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