State of Michigan Sanctions Prosper
The State of Michigan, Department of Energy, Labor and Economic Growth’s Office of Financial and Insurance Regulation has sanctioned Prosper Marketplace (prosper.com).
In the Administrative Consent Order, the Commissioner found that:
– Prosper notes are securities
– Prosper failed to properly register the securities
– Prosper failed to make the required disclosures to investors.
It is interesting to note that Prosper submitted an application to register securities in Michigan on November 8, 2007. This would indicate that Prosper, at that point, was aware that the their loans/notes should be registered as securities. Yet, Prosper Marketplace continued to offer/facilitate unregistered securities to unsuspecting investors for quite some time – while continuing to make public statements to the contrary, indicating that Prosper was in full compliance with applicable laws.
The Michigan Consent Order can be found here.