# Prosper.com, microlending and the SEC shutdown **URL:** \ **Category:** Factual Questions\ **Created:** [March 8, 2009, 12:02am UTC](https://boards.straightdope.com/t/prosper-com-microlending-and-the-sec-shutdown/488690 "2009-03-08T00:02:27Z")\ **Posts on this page:** 5\ **Page:** 1
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [March 8, 2009, 12:02am UTC](https://boards.straightdope.com/t/prosper-com-microlending-and-the-sec-shutdown/488690/1 "2009-03-08T00:02:27Z")
I am having trouble finding out what the current state of [Prosper.com](http://Prosper.com) is. They were shut down by the SEC in November, but I don’t see what changed that allows them to operate now. I also can only find articles recommending Prosper in these economic times. Are there any independent sources verifying their default rate? I’d like to see what’s going on with that. I am considering lending, but I want to educate myself. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [March 8, 2009, 12:23am UTC](https://boards.straightdope.com/t/prosper-com-microlending-and-the-sec-shutdown/488690/2 "2009-03-08T00:23:52Z")
They weren’t shut down by the SEC. They have entered a “quiet period” while their application for certain securities licenses is pending. The SEC requires quiet periods to prevent people from building up artificial market hype around certain announcements. The most visible example is probably when a company enters a quiet period before they issue an IPO. Apparently this quiet period is so they can get a license allowing them to setup a secondary market for their loans, but details are scarce. AFAIK they’re not holding any new auctions at present (but are still funding loans through other means) so you can’t lend money until they come out of their quiet period. As for their default rates, they have been rather high except for the best credit grades. You can find lots of information about their rates and collection statistics on [prospers.org](http://prospers.org) (a community of extremely disgruntled lenders) and other places. ---
**Author:** ![Cerowyn](https://avatars.discourse-cdn.com/v4/letter/c/82dd89/32.png) [@Cerowyn](https://boards.straightdope.com/u/Cerowyn)\ **Post date:** [March 8, 2009, 12:25am UTC](https://boards.straightdope.com/t/prosper-com-microlending-and-the-sec-shutdown/488690/3 "2009-03-08T00:25:08Z")
I don’t believe the SEC can shut a company. They can suspend trading in their stock, or punish a public company for their reporting practices, but it would have to be another branch of the government that actually forced a business to close. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [March 8, 2009, 12:35am UTC](https://boards.straightdope.com/t/prosper-com-microlending-and-the-sec-shutdown/488690/4 "2009-03-08T00:35:20Z")
> [@friedo](#): > > Apparently this quiet period is so they can get a license allowing them to setup a secondary market for their loans, but details are scarce. Actually, I take that back. Upon further looking it seems the current license they are seeking is for [securities they already sold](http://www.oregonlive.com/business/index.ssf/2008/12/securities_regulators_reach_1.html). Apparently they didn’t think they had to register their basic loans as securities but various state regulators disagreed. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [March 8, 2009, 12:56am UTC](https://boards.straightdope.com/t/prosper-com-microlending-and-the-sec-shutdown/488690/5 "2009-03-08T00:56:03Z")
[prospers.org](http://prospers.org) is down.