Finally…the moment we and so many supportive and loyal Prosper communitymembers have been waiting for… after nine long months of navigating therapidly changing regulatory landscape, we are thrilled to announce thatProsper’s registration statement with the SEC has been declaredeffective. Prosper lenders can once again invest directly in fellow Americans and small businesses!

Although this has been an excruciatingly long and frustratingprocess, especially considering that it has played out during the worstcredit crisis in 70 years, this is a watershed moment. Prosperis the first Internet auction-based P2P loans marketplace and tradingplatform to have its SEC registration declared effective, which meansthe SEC is permitting Prosper to facilitate auctions in a way that hasnever been done before.

Selling securities by auction is not new and critical to greaterefficiency in fair price discovery for both sides of the transaction.However, the SEC has never permitted Wall Street investment banks orany other institution to run a true auction where investors could makean irrevocable bid that committed funds prior to the establishment of afinal rate. Previously all bids were revocable at any time prior to theestablishment of a final price and no funds could be committed prior tothis time (e.g. Google IPO). This previous requirement made competitiveauctions for small consumer loans like Prosper’s virtually impossibleunder an SEC regulatory regime.  (Continue reading below the video…)





Trade Existing Notes
We’re also incredibly excited to introduce an Internet auction-priced trading platform for Prosper Notes.As many early Prosper lenders know, we’ve been working on this featuresince we first launched in February 2006. We know that financialmarkets thrive on liquidity, which in P2P lending means lenders willhave the opportunity to sell Prosper Notes any time regardless of theloan term. The note trading service is provided by Foliofn Investments, Inc., through their Folio Investing Note Trader platform.


Prosper Ratings
Other significant improvements include a new Prosper Rating systemto make bidding easier and more rewarding. The new Prosper rating isbuilt on Prosper’s huge database of approximately 28,000 loans. We havealso introduced a minimum 640 credit score requirement for borrowersand a minimum bid floor for each Prosper rating to improve and optimizereturns. Finally, to improve the ease of diversification, we’ve loweredthe minimum bid amount to $25.

All of this translates into more opportunity for average Americansto use Prosper to fund loans directly, earn an attractive return in anew asset class, and help their fellow Americans at the same time.

Perhaps this is why the peer-to-peer lending has garnered suchsupport from financial policy makers. For example, Federal ReserveChairman Bernanke just said in a speech three weeks ago, “emergingtechnologies like peer-to-peer leading also show promise.” AndCalifornia Department of Corporations Commissioner Preston DuFauchardstated in May that Prosper’s P2P lending model is a perfect example of,“the kinds of innovative ideas that can help get credit in the hands ofpeople who need it while instilling in our financial marketsdesperately needed openness and transparency.

We’re proud to take thelead in providing regulatory approval and oversight for Prosper.”

Let’s seize the moment!