Papel de las TIC en la formación permanente del profesorado de corte

Since 2006, P2P lending platforms including Prosper Marketplace and Lending Club have relied on selling platform notes which were structured as borrower-dependent promissory notes. The platform notes are debt obligations that depend on the performance of the underlying loans. Generally, platform notes were offered in tranches or different loan grades based on risks.

99 _{SEC v. Howey Co., 328 U.S. 293 (1946)}

100 _{Prosper Marketplace, Inc. 3 S.E.C. 13296 (2008). Order Instituting cease-and-desist Proceedings according to}

Section 8a Of The Securities Act Of 1933, Making Findings, And Imposing A Cease-And-Desist Order.

By 2008, there were four major platforms including Prosper Marketplace, Lending Club, Zopa, and Loanio. Together, the four major platforms lend around roughly $150 million in 2008 which was a dramatic increase from the previous year.102 _{At this early stage, P2P lending platforms saw} themselves as an online platform functioning like a lending intermediary.103 _{From this point of} view, the early day of the P2P lending industry was more suitable to be regulated under the lending regulation regime instead of securities regulations. Based on the Howey Investment Contract Analysis, the SEC determined that the borrower-dependent promissory notes

constituted securities because platform lenders invested their money in a P2P lending enterprise and relied on the efforts of P2P lending platforms to earn interest returns.104 _{The SEC, therefore,} demanded that P2P lending platforms must register the platform notes under the SEC securities regulation regime.105 _{In 2008, the SEC began to investigate P2P lending operations actively and} required P2P lending platforms offering platform notes to the public to register notes with the SEC.106

Learning about the SEC investigation, Lending Club, which was the second largest P2P lending platform at the time, took a proactive approach by turning around and starting to

cooperate with the SEC. Renaud Laplanche, Lending Club's founder and CEO, said: "If [Lending Club] had a clean situation to start with, we probably could have registered the new offering while our current marketplace continued."107 _{In April 2008, Lending Club stopped accepting new} funds from retail lenders and started the registration process. This so-called quiet period lasted six months during which Lending Club still took loan requests and funded them by Lending Club's own money. Lending Club also continued to service originated loans according to terms and conditions the loans were made. At the time of registration, Lending Club's business model was clean and simple. Lending Club assigned fixed a fixed interest rate to each loan according to risk class based on financial evaluation such as credit history and income or salary and sold payment-dependent notes associated with platform loans to platform lenders. In fact, Lending Club itself bought about half of the issued platform notes. In October 2008, upon receiving the green light from the SEC, Lending Club emerged from its quiet period began selling platform notes to retail lenders again.

102 _{Brad Stone, Lending Alternative Hits Hurdle, The New York Times,}

http://www.nytimes.com/2008/10/16/technology/start-ups/16peer.html (Last visited Nov. 3, 2018).

103 _{Nate Litter, INTERVIEW WITH CHRIS LARSEN OF PROSPER.COM,}

https://blog.perfectspace.com/2006/10/12/interview-with-chris-larsen-of-prospercom/ According to an interview in 2006, Chris Larsen saw Prosper as an intermediary in a marketplace where people could borrow and lend directly from each other; he explained in an interview that “Prosper is a people-to-people marketplace that connects

individuals seeking to borrow money and those interested in lending it. Prosper’s role is to provide a safe and secure marketplace where any person can post a loan listing as long as they pass strict fraud and ID verifications and any person with as little as $50 can lend. Because money is flowing directly between people with money and those that need it…borrowers should get more competitive rates while those lending money should receive a higher rate of return.”

104 _{Administrative Proceeding No. 3-13296, Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A}

of the Securities Act of 1993, Making Findings, and imposing a Cease-and-Desist Order in the Matter of Prosper Marketplace, INC (2008).

105 _{See id}

106_{See also, Erick Schonfeld, SEC Outlines its Reasoning for Shutting Down P2P Lender Prosper}

https://techcrunch.com/2008/11/26/sec-outlines-its-reasoning-for-shutting-down-p2p-lender-prosper/ (Last visited Nov. 10, 2018).

107 _{Brad Stone, Lending Alternative Hits Hurdle, The New York Times.}

On the other hand, Prosper Marketplace had episodes of failed attempts to explain and defend its model of operation with the SEC. As early as 2006, Prosper requested a no-action letter, asking the SEC to assure that its structure and operation complied with SEC rules. The SEC did not offer assurance that Prosper Marketplace was not committing securities violation, nor it would not take action against such violation. In October 2007, Prosper Marketplace filed Form S-1 with the SEC, seeking to register securities consisting of "the Prosper Marketplace Lender Participant Rights and Borrower Non-Recourse Notes." Again, the SEC issued a rejection letter in response to the registration statement citing numerous material failures in respects to the Securities Act. The SEC particularly noted a failure to identify all co-registrants, a failure to include the required financial statements, and a failure to abide by the Trust Indenture Act.

Chris Larsen, Prosper Marketplace's founder, and CEO said he did not believe Prosper would need to register with SEC the same way Lending Club did, citing a different lending method in which Lending Club set the interest rates on its loans and was itself financing about half the overall loan volume on the platform. The persistent struggle with the SEC seems to suggest that Prosper Marketplace was not willing to change its structure to Lending Club's model which was approved by the SEC. In fact, Chris Larsen confirmed his conviction in the same interview that "peer-to-peer lending harked back to an age when borrowers and lenders knew one another personally." This emphasizes his vision of P2P lending being an intermediary engaging in the personal relationship among borrowers and lenders.

Nonetheless, Prosper Marketplace suddenly decided to follow Lending Club's model. It entered a quiet period and agreed to amend its filing as demanded by the SEC. By doing so, Prosper Marketplace halted its platform operation for new loans. Unlike Lending Club, Prosper Marketplace did not accept new investment from retail lenders nor new loan requests from borrowers. Nevertheless, it continued servicing existing loans. Interestingly, a month after Prosper Marketplace started its quiet period, the SEC issued a cease-and-desist letter ordering Prosper Marketplace to stop offering to sell platform notes to the public in violations of Sections 5(a) and (c) of the Securities Act.

It took Prosper Marketplace many months to get approved during which the SEC required Prosper Marketplace to amend its Form S-1 six times. Major concerns the SEC had included the inclusion of material information in the prospectus and supplements and the procedure Prosper would take to disclose such information. Finally, Prosper Marketplace's registration statement with the SEC was declared effective in July 2009; and it resumed its full operation a few days after.

The fact, the SEC issues a cease-and-desist letter against Prosper Marketplace even after the platform already halted issuing new loans seems to indicate a preference of the SEC towards Lending Club and its business model. There is no definite answer to why it is the case, but one plausible argument is that the SEC is more comfortable with a more traditional lending model purposed by Lending Club over Prosper Marketplace's novel model which incorporated many novel elements such as auction mechanism and peer-to-peer features like group affiliations and descriptive personal profiles. The SEC might also see Prosper Marketplace as a riskier lending platform for lenders because Prosper Marketplace was simultaneously challenged by upset lenders and a consumer protection organization in pending lawsuits.