Author Topic: Note Trader Platform To Be Discontinued  (Read 11157 times)

Prescott

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Note Trader Platform To Be Discontinued
« on: September 29, 2016, 01:55:25 PM »
Well this is fun!

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A Message from Prosper and Folio Investing

Dear Prescott,

We are writing to let you know that as of October 27, 2016, Prosper will no longer offer the Folio Investing Note Trader platform, the secondary market for Prosper Notes. Prosper has found over time that very few investors are using the secondary market and, as such, has made the decision to no longer offer this service. We apologize for any inconvenience that this causes. Prosper remains committed to its retail investor clients and to providing them a great experience.

Here's what this means for you: The secondary market trading service will be available as normal until end of day (5:30 pm PST) October 19, 2016. After that time, any new orders to list Notes for sale will not have sufficient time to be completed and processed before the site becomes unavailable to users at the end of day (5:30 pm PST) on October 27, 2016.

Once the secondary market trading service is terminated, you will not be able to sell Notes that you own, and you will need to hold them to maturity.

If you have questions about your Notes or the wind-down of the Folio Investing Note Trader platform, please contact Prosper customer service at 877-611-8797.

Thank you.

Prosper and Folio Investing

TheReaper

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Re: Note Trader Platform To Be Discontinued
« Reply #1 on: September 29, 2016, 03:28:49 PM »
Yes, I got that from them as well.  Not sure how legal this is.  I use it constantly.  I only signed up for Prosper because they had the "exit" ability on notes like LC.  Prosper is a total piece of garbage anyways.  Worst user interface I've ever seen from a company in quite some time.

I'd be interested in joining a class action suit against them, to stop them from attempting this.  Unless, they wrote somewhere they could discontinue at anytime when I signed up...I don't see how it is legal to change business practices that are so vital to an iliquid market.  In a sense, they duped me under false pretense.   They claim nobody uses it...what a bunch of hogwash.  In fact, I bet they were having a hard time issuing new notes because everyone was on Folio instead.  I haven't participated in new issues in 6 months with them.  I use Folio 100% when it comes to Prosper.

Fred93

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Re: Note Trader Platform To Be Discontinued
« Reply #2 on: September 29, 2016, 04:11:26 PM »
I don't see how it is legal to change business practices that are so vital to an iliquid market.  In a sense, they duped me under false pretense.

I took a look at various versions of the prospectus filed over the years.  It looks like the one filed TODAY is the first one where they say Folio is closing.  Earlier versions said
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The Notes and PMI Management Rights will not be transferable except through the Folio Investing Note Trader platform, or the “Note Trader platform,” operated and maintained by FOLIOfn Investments, Inc., a registered broker-dealer. There can be no assurance, however, that a market for Notes will develop on the Note Trader platform. Therefore, note purchasers must be prepared to hold their Notes and PMI Management Rights to maturity.
That says the secondary platform exists, but doesn't promise its viability and warns investors that they might need to hold notes to maturity.  I suspect their lawyers thought that was adequate disclosure.


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They claim nobody uses it...what a bunch of hogwash.

We know volume was low.  Although volumes were never published, we had strong hints, just from watching the market.  My belief is that the volume was so low that there's no way folio could have been making a profit, and probably required prosper to pay folio just to keep the thing open.

TheReaper

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Re: Note Trader Platform To Be Discontinued
« Reply #3 on: September 29, 2016, 05:23:24 PM »
Thanks Fred for your quick reply.  I figured there was some legal mumbojumbo BS buried in there.  Just another reason why Prosper trails Lending Club, and will continue to fall further behind until it fades into the long list of failed businesses.  I want out now!

Thanks again for your research and taking the time to respond, Fred.

CarlAllen

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Re: Note Trader Platform To Be Discontinued
« Reply #4 on: September 29, 2016, 05:57:55 PM »
Ugh, got this today. I had been thinking about liquidating my Prosper holdings, but now they've forced me to use Prosper (and complicate my tax returns) for the next 5 years. Pretty ridiculous. I'm certainly going to stop purchasing notes on Prosper.

The "low volume" explanation is pretty tone deaf. It's like Toyota telling me they're taking the seat belt out of my car because they've noticed that it doesn't serve a function for the majority of drivers' time on the road.

wiseclerk_com

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Re: Note Trader Platform To Be Discontinued
« Reply #5 on: September 29, 2016, 05:59:20 PM »
I like your analogy.
I publish the http://www.p2p-banking.com blog

Prescott

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Re: Note Trader Platform To Be Discontinued
« Reply #6 on: September 29, 2016, 06:10:31 PM »
I never used folio actively, but it was nice to know it was there in case I needed to exit for some reason.

Here's hoping there is another solution coming up - there have been rumors of people trying to make a better second market for the industry. Of course Orchard has one for institutional players, not sure that would open up to retail - likely more regulatory headaches than it's worth.

A liquidity solution would be nice, even if it's "I need to liquidate my entire portfolio" and they some how facilitate your entire portfolio sale to some hedge fund that is purchasing.

AnilG

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Re: Note Trader Platform To Be Discontinued
« Reply #7 on: September 29, 2016, 07:59:04 PM »
The secondary market requires broker-dealer license. It is not easy to get such license. See how long it is taking Orchard to get such approval. Folio has the license. Prosper excuse of low volume is laughable. They can't expect high volume without providing data, tools and support to the ecosystem. Anyway, the current Prosper management was never interested in direct retail. This may be start of phasing out of direct retail participation on Prosper platform.

I never used folio actively, but it was nice to know it was there in case I needed to exit for some reason.

Here's hoping there is another solution coming up - there have been rumors of people trying to make a better second market for the industry. Of course Orchard has one for institutional players, not sure that would open up to retail - likely more regulatory headaches than it's worth.

A liquidity solution would be nice, even if it's "I need to liquidate my entire portfolio" and they some how facilitate your entire portfolio sale to some hedge fund that is purchasing.
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Anil Gupta
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Prescott

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Re: Note Trader Platform To Be Discontinued
« Reply #8 on: September 30, 2016, 02:37:19 PM »
It takes about 6 months to get a license (Finra actually sets a deadline, but they do like to give themselves extensions). I've been through it twice and currently going through it again.

I agree they have really only used retail for marketing points. If they do drop retail, I hope they offer an option to purchase out our notes rather than force us to wait for it to run down. But I'm not sold their plan is actually to drop retail.

If anyone is interested in building a second market for retail, we should connect - I think there's opportunity there

AnilG

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Re: Note Trader Platform To Be Discontinued
« Reply #9 on: September 30, 2016, 03:37:15 PM »
Agree. I doubt that they will drop direct retail completely just yet. But, the latest disclosures from Lending Club about size (~150K, ~$400M) of retail lenders is telling how small this segment is even after a decade. Platforms seem to be more interested in acquiring retail investors through funds/ETF/brokerage "consolidated" channels now. I expect platforms slowly moving away from retail lenders and even small institutional lenders directly lending on the platform.  Industry is in flux. It needs different sources of capital but direct retail lending may not be that attractive to platforms.

Last year someone reached out to me who was looking into setting up secondary market for retail lenders. I think he might still be pursuing it. If you want I will be happy to connect you with him.

It takes about 6 months to get a license (Finra actually sets a deadline, but they do like to give themselves extensions). I've been through it twice and currently going through it again.

I agree they have really only used retail for marketing points. If they do drop retail, I hope they offer an option to purchase out our notes rather than force us to wait for it to run down. But I'm not sold their plan is actually to drop retail.

If anyone is interested in building a second market for retail, we should connect - I think there's opportunity there
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

Gatsby

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Re: Note Trader Platform To Be Discontinued
« Reply #10 on: September 30, 2016, 10:13:17 PM »
We know volume was low.  Although volumes were never published, we had strong hints, just from watching the market.  My belief is that the volume was so low that there's no way folio could have been making a profit, and probably required prosper to pay folio just to keep the thing open.
Prosper removed the links to the secondary market from their pages and that might have caused reduced volume. There were many times I could not even reach Folio and not because of their legendary technical bugs - the links were simply not there.

First, the 'redesigned' page that does not sit still and now this. I feel Prosper is trying to get rid of the retail investors. Why not, we are a pesky lot ;)

TheReaper

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Re: Note Trader Platform To Be Discontinued
« Reply #11 on: October 01, 2016, 03:52:43 AM »
Prosper, in my opinion, is a poorly lead company.  The home page is laughable...all those pretty colors under the rainbow, and it lacks basic functionality.  What a waste of development time and money.  The Folio site is cumbersome and time consuming to use.  No wonder nobody uses it.  Like Gatsby mentioned, there is no link on their new home page.  I think if their ultimate goal is to phase out the individual investor, then they are doing it in a very ungraceful way. The customer service department is rude anytime I ask a question, and thats if they ever bother answering the question to begin with.  Never have they answered within a timely manner (via email)

I've felt for a long time that LC would ultimately phase out the individual investor, leaving Prosper as the viable option...which would be a boon for Prosper.  But as so often witnessed in companies, radical decisions are not thought through with long term vision and consequences in mind.  I would never shut out the individual investor, but maybe raise the minimum investment.  To limit sources of funding, is asking for potential problems down the road.

acensor

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Re: Note Trader Platform To Be Discontinued
« Reply #12 on: October 01, 2016, 09:05:58 PM »
Well this is fun!

Quote
A Message from Prosper and Folio Investing

Dear Prescott,

We are writing to let you know that as of October 27, 2016, Prosper will no longer offer the Folio Investing Note Trader platform, the secondary market for Prosper Notes. .

Like others here.... I'm SORELY disappointed.
I did a few test trades on Folio, and don't use it regularly BUT it was important to me that it was available....for the very obvious reason that if I REALLY needed to pull cash out faster than waiting 3 to 5 years I could sell my notes...even if I had to sell at a significant discount.

I have sent a message to Prosper saying that this will put a damper on how much I'm willing to invest at Prosper and on my recommending it to friends interested in peer-to-peer investing.

HOW ABOUT THIS:
Not sure it'll help, but it would not hurt if everyone here (seems to be universal disappointment with Prosper's move) emails (support@prosper.com) and calls and makes our disappointment real clear and asks they reconsider?

QUESTION:
It looks to me like the Folio trading platform itself may not be closing down.
Anyone know that?
AFAIK Lending Club also allows sales on Folio.
Anyone know if Lending Club is has or is going to pull the plug on that in their service?

Think there's any way one could with a legal contract "sell" their Prosper account (or assign full control of it) to a willing buyer.... then implement that sale simply by giving the buyer one's login and password?

Finally, in reply to someone' post here:
I might be interested in participating in a class action.
But suggest starting out with just an inexpensive lawyer drafted letter threatening a class action.

Alex

P.S., FWIW: Unlike TheReaper, I have always been treated well and informatively, and helpfully by Prosper investor services personell.

fuckprosper

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Re: Note Trader Platform To Be Discontinued
« Reply #13 on: October 05, 2016, 08:09:01 PM »
If a suit goes forward I'm certainly interested in participating.

Nobody used Folio amirite guys? 22,992 Notes... nobody


fuckprosper

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Re: Note Trader Platform To Be Discontinued
« Reply #14 on: October 06, 2016, 03:57:36 AM »
Right guys? 22,992... that's practically nobody. No way anyone would be interested in a class action lawsuit. That's practically no money... minimum $574,800 is practically nobody. Nobody is interested in well over half a million in positions. WHAT A WASTE OF TIME LAWYERS!