Author Topic: Fairer Solutions to Excess Investor Demand  (Read 82607 times)

rawraw

  • Hero Member
  • *****
  • Posts: 2792
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #150 on: September 10, 2013, 06:29:51 PM »
Peter, I'm glad you are adding some sanity to the thread.  This forum has been such a panicky place recently I've started to enjoy reading the threads less and less.  I sure hope that doesn't hide the reasonable suggestions that are being made from people like Renauld when they read the forum.

Fred

  • Hero Member
  • *****
  • Posts: 1421
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #151 on: September 11, 2013, 12:58:07 AM »
BTW, Renaud said he has been reading this thread and taking note of all the ideas. So, even though he doesn't participate here you can be sure your ideas are at least being taken into consideration by the CEO at Lending Club.

Everybody, please say Hi to Renaud. :)

If LC issues boil down to just "capacity issues", then this is really one of the best problems a start-up (err ...  pre-IPO) company could have --  too much demand is better than no demand.
 

LC Adv

  • Newbie
  • *
  • Posts: 18
    • View Profile
    • Email
Re: Fairer Solutions to Excess Investor Demand
« Reply #152 on: September 11, 2013, 09:38:56 AM »
I am glad to report that as of this morning all my technical issues have been fixed, there is a full supply of notes available, the website is functioning beautifully and once again I am fully invested.  Congrats to the IT boys on their superb effort, and my LC Rep for helping. LC has some of the best reps I have ever had the privilege of dealing with.

Now that I have time to think I will resume placing low-ball bids for Puerto Rico Bonds which are being thrown out like a baby with the bathwater.

As for the LC IPO, I think that all LC Investors should be given a chance to purchase " Friends and Family" shares, or to participate in some sort of Dutch Auction Pre-IPO.  Anyone else agree?

core

  • Hero Member
  • *****
  • Posts: 1784
  • Your loss is my gain
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #153 on: September 11, 2013, 09:51:32 AM »
As for the LC IPO, I think that all LC Investors should be given a chance to purchase " Friends and Family" shares, or to participate in some sort of Dutch Auction Pre-IPO.  Anyone else agree?

Heck yeah!  Even though I would question the financial wisdom of doing so, I'd be all over that just for the fun of it.  Excellent idea.  I think you should be allowed to purchase one round lot for each day that you tried to invest in notes but couldn't due to short supply.

With my luck, my shares will show up as being "in review" for 3-4 weeks and then eventually the cash will be returned to my brokerage account.

Fred

  • Hero Member
  • *****
  • Posts: 1421
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #154 on: September 11, 2013, 05:58:33 PM »
As for the LC IPO, I think that all LC Investors should be given a chance to purchase " Friends and Family" shares, or to participate in some sort of Dutch Auction Pre-IPO.  Anyone else agree?

Ha ..., ha ..., this would be nice.  8)

However, I am not sure that the management or underwriters would like to see the value of their shares reduced by "Friends and Family" dilution or the Dutch Action.  In general, IPO valuation is priced so that the shares will rise about 15% on the first day.

DanB

  • Hero Member
  • *****
  • Posts: 665
  • A lie told often enough becomes The Truth!
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #155 on: September 11, 2013, 06:21:56 PM »
As for the LC IPO, I think that all LC Investors should be given a chance to purchase " Friends and Family" shares, or to participate in some sort of Dutch Auction Pre-IPO.  Anyone else agree?

Heck yeah!  Even though I would question the financial wisdom of doing so, I'd be all over that just for the fun of it.  Excellent idea.  I think you should be allowed to purchase one round lot for each day that you tried to invest in notes but couldn't due to short supply.

With my luck, my shares will show up as being "in review" for 3-4 weeks and then eventually the cash will be returned to my brokerage account.

Haven't you heard? They've already made the decision to set aside a special class of stock just for you. It'll become available for you to purchase once the regular shares have risen by 70% or more.............& you can only trade on it once every 90 days.  :)

nonattender

  • Hero Member
  • *****
  • Posts: 725
  • I am not here.
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #156 on: September 14, 2013, 05:53:18 PM »
The biggest obstacle to a "solution" for this issue is the SEC.  They, if memory serves (and it usually does), demanded that Prosper
dismantle their "standing order" feature and instead replace it with a "shopping cart"-like system which required investors to login,
manually approve each "basket", and then "invest".   Prosper then had to work around that, w/AQI, which has features similar, but
not identical, to the old "standing order" feature - you set your targets and then when a loan is listed AQI will (via an excel macro!)
invest funds into the loan (rather than the old way, which would fill "standing orders" with the new loans - and worked in reverse.)

I don't know if the SEC is still so dominant - or if Prosper still works this way on the backend - but they had it set up right long ago,
when, blammo, here comes the SEC to make Prosper conform to the way that LC had structured its offering.  (No spec as to why...)

Anyway - all inside baseball and regulatory gamesmanship aside - until a mechanism exists to real-time fill loans, with pre-signalled
capital commitments (which, it appears, only exists, at the moment, for LCA), neither platform can implement any longterm solution -
at the platform level...  which is all anyone really wants - a "standing order" system which can save us time and put us all "in line"...

*shrug*
A little nonsense now and then is relished by the wisest men.

Rob L

  • Hero Member
  • *****
  • Posts: 2117
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #157 on: September 14, 2013, 06:25:46 PM »
They, if memory serves (and it usually does), demanded that Prosper dismantle their "standing order" feature and instead replace it with a "shopping cart"-like system
Thanks for the history lesson. Very informative for a n00b like me. Helped me connect a few dots.

nonattender

  • Hero Member
  • *****
  • Posts: 725
  • I am not here.
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #158 on: September 14, 2013, 06:38:42 PM »
Yes...I'm  filled with P2P history...

On that note, important to remember that Prosper had just switched to a fixed price model, like LC, where they were pricing their own notes, so, likely that SEC did not like that setup because it led to some "principal/agent" issues, whereas Prosper was setting prices and, at the same time, filling standing orders (perhaps the SEC viewed this as too tempting - "they could just chg their underwriting to hit all those pre-existing capital commitments"?), so, chose the pivot point of "pricing/investing" to draw a line in sand for both P & LC.

Prior to this, when Prosper had the auction pricing mechanism in place to solve "excess investor demand", there was no problem - but once they dropped auctions and were pricing the securities AND placing orders on behalf of customers (even though the orders were "set" by customers), maybe the SEC saw a potential conflict and that's why...........

This is why I say, unpopularly, that a price discovery/rate-competition, via auction (realtime competition btwn standing orders) would likely return at some point - as it's the only mechanism, w/SEC's pivot point, which would allow for non-conflicted realtime order filling, under current regulatory regime (which is pretty insufficient, anyway, as SEC doesn't do squat for any issues on the borrower side)...

Ahwell.  Swimming time.
A little nonsense now and then is relished by the wisest men.

brycemason

  • Hero Member
  • *****
  • Posts: 801
    • View Profile
    • P2P-Picks.com
    • Email
Re: Fairer Solutions to Excess Investor Demand
« Reply #159 on: September 14, 2013, 07:46:21 PM »
Yes...I'm  filled with P2P history...
...Ahwell.  Swimming time.

+rep! Nice history and explanation of some constraints they may feel like they're under.

Fred

  • Hero Member
  • *****
  • Posts: 1421
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #160 on: September 14, 2013, 08:42:06 PM »
For your reading enjoyment:

SEC Cease-and-Desist Order on Prosper -- http://www.sec.gov/litigation/admin/2008/33-8984.pdf

The issue was more about the treatment of the notes being issued & sold.  They were not treated as securities by Prosper, while SEC on the other hand thought that they were securities.  Securities need be registered with SEC before they could be bought or sold.

Summary:
Prosper operates an online lending platform connecting borrowers with lenders. The loan notes issued by Prosper pursuant to this platform are securities and Prosper, from approximately January 2006 through October 14, 2008, violated Sections 5(a) and (c) of the Securities Act, which prohibit the offer or sale of securities without an effective registration statement or a valid exemption from registration.

nonattender

  • Hero Member
  • *****
  • Posts: 725
  • I am not here.
    • View Profile
Re: Fairer Solutions to Excess Investor Demand
« Reply #161 on: September 14, 2013, 08:55:02 PM »
That's merely the document by which SEC exerted authority over "P2P lending" ("loans" into "notes")...

What I'm talking about is the near constant oversight and direction that SEC has exercised, since then.
P2P is the most highly regulated industry I've ever come across - and it all happened AFTER that C&D...

SEC's director of division of corporate finance at the time was... LendingClub's former in-house counsel.
She officially recused herself from all P2P related issues at some point - so, I don't know, but whatever.

Anyway, what you reference was not the "issue" which I was talking about, which is still an on-going...
A little nonsense now and then is relished by the wisest men.