Author Topic: New FOLIO Trading Agreement  (Read 9173 times)

DanB

  • Hero Member
  • *****
  • Posts: 665
  • A lie told often enough becomes The Truth!
    • View Profile
New FOLIO Trading Agreement
« on: September 11, 2013, 02:32:39 AM »
Any attorneys among us want to comment on whether there is anything of importance in the new Folio "Trading Agreement" notice/advisory? (see below)

"Purchasing Notes on the Trading Platform is inherently risky as the asking price is set by the seller, and may be priced higher than the remaining return expected on the Note.

Purchasing Notes with a negative Yield to Maturity or with large markups are almost certain to return less money than the price you will pay, producing negative returns on your investment.

There are various reasons a current Note holder chooses to list a Note for sale. Often Note holders are simply looking to liquidate their holdings; they may place Notes for sale at or slightly below par value (i.e., below the remaining interest and principal remaining on the Note). However, other sellers may be seeking to profit on their sales. They may price Note above its par value, either in the hopes that a buyer will view the Notes as very valuable or because they may hope to profit from a lack of buyer's insight. They may hope that the buyer will not realize that the price has been set so high, or they may hope that a buyer will not be paying close attention to the price set.

Please be wary of Notes that are priced at high premiums.

In addition, the original interest rate set by Lending Club was based on the borrower's credit attributes at the time the loan was requested and may no longer represent the underlying risk of the Note. While the underlying risk may have increased, the interest rate has not and may not offset the risk a buyer undertakes when purchasing a Note.

Since the Note was issued the borrower's attributes have most likely changed, among these could include changes to credit score, income, employment, credit utilization, debt-to-income, and many other important factors. You should buy a Note only if you understand and are comfortable with these risks".

core

  • Hero Member
  • *****
  • Posts: 1784
  • Your loss is my gain
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #1 on: September 11, 2013, 02:40:32 AM »
Wow you actually have to click Accept on that too, in order to get to Folio.  Fortunately just a one-time deal, unlike Prosper where you have to do it each and every time.

Anything of importance?  No.  In fact it's sad that they had to actually say these things.

They left out a couple things:
1. Don't talk to strangers
2. Look both ways before crossing the street


rawraw

  • Hero Member
  • *****
  • Posts: 2793
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #2 on: September 11, 2013, 05:46:32 AM »
Wow you actually have to click Accept on that too, in order to get to Folio.  Fortunately just a one-time deal, unlike Prosper where you have to do it each and every time.

Anything of importance?  No.  In fact it's sad that they had to actually say these things.

They left out a couple things:
1. Don't talk to strangers
2. Look both ways before crossing the street
We both know you are worried this will cut into your FolioFN antics! :) 

core

  • Hero Member
  • *****
  • Posts: 1784
  • Your loss is my gain
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #3 on: September 11, 2013, 06:50:10 AM »
We both know you are worried this will cut into your FolioFN antics! :)

Most of my customers are so foolishly addicted to losing money, it will have no effect.

You know, they could have made the entire disclaimer shorter and easier for the financially challenged to read by wording it simply:

Be careful about overpaying for notes.  There are slimy snakes on here who would like nothing better than to take your money and see you make a pouty face.

Yeah welcome to trading.  It ain't any different anywhere else.

New Jersey Guy

  • Hero Member
  • *****
  • Posts: 914
  • Hell Yea it's a Hemi!
    • View Profile
    • Email
Re: New FOLIO Trading Agreement
« Reply #4 on: September 11, 2013, 08:40:09 AM »
"Any attorneys among us want to comment on whether there is anything of importance in the new Folio "Trading Agreement" notice/advisory? (see below)"

Anybody who needs a lawyer to understand that shouldn't be trading here to begin with.

With the Folio section of IR being down, I can't get an exact percentage of how many notes are listed for higher than 5% markup.  I can say, it's very, very high, with most of those probably being owned by Core!

Core....out of curiosity, how many notes do you currently have up for sale on Folio.
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

core

  • Hero Member
  • *****
  • Posts: 1784
  • Your loss is my gain
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #5 on: September 11, 2013, 09:31:20 AM »
With the Folio section of IR being down, I can't get an exact percentage of how many notes are listed for higher than 5% markup. 

Approximately 53.7% of the notes currently listed are for higher than 5% markup.  And if you go up to 10% markup you still catch nearly 29% of all notes.  So yeah, very high.

I can say, it's very, very high, with most of those probably being owned by Core!
Core....out of curiosity, how many notes do you currently have up for sale on Folio.

Not hardly.  I currently have just 831 notes up for sale.  Trade smarter, not harder!

Back to that new disclaimer, the way I read it (grammar aside) they're saying that if you buy a negative YTM note it's "almost certain" that your return will be negative.  Why "almost"?  Surely when they wrote that they weren't assuming that you would turn around and sell it right away to a greater fool, which is the only way.  I'm wondering if I'm missing something and if there's any possible other way you'd end up with anything besides the predicted loss.  Some obscure chain of events perhaps.

yojoakak

  • Hero Member
  • *****
  • Posts: 763
    • View Profile
    • Check out my Greasemonkey/Tampermonkey script for LendingClub here
    • Email
Re: New FOLIO Trading Agreement
« Reply #6 on: September 11, 2013, 10:18:55 AM »
Back to that new disclaimer, the way I read it (grammar aside) they're saying that if you buy a negative YTM note it's "almost certain" that your return will be negative.  Why "almost"?  Surely when they wrote that they weren't assuming that you would turn around and sell it right away to a greater fool, which is the only way.  I'm wondering if I'm missing something and if there's any possible other way you'd end up with anything besides the predicted loss.  Some obscure chain of events perhaps.

I haven't done the math but since YTM is based on original maturity would it be possible to buy a slightly negative YTM 3-year note on a payment plan that extends the maturity past the original maturity date and end up with a slightly positive return?

Joleran

  • Full Member
  • ***
  • Posts: 151
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #7 on: September 11, 2013, 10:20:57 AM »
Some obscure chain of events perhaps.

It goes late, they pay late fees and bring it current.  Wash, rinse, repeat, and buy a lottery ticket to capitalize on your unbelievable luck?

core

  • Hero Member
  • *****
  • Posts: 1784
  • Your loss is my gain
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #8 on: September 11, 2013, 10:32:05 AM »
Yes, both excellent scenarios there.  Goodie, now we have a couple good arguments ready in case they consider disallowing negative YTM listings.  I was going to ask for wagers on when that day will come.

DanB

  • Hero Member
  • *****
  • Posts: 665
  • A lie told often enough becomes The Truth!
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #9 on: September 11, 2013, 11:09:31 AM »
"Any attorneys among us want to comment on whether there is anything of importance in the new Folio "Trading Agreement" notice/advisory? (see below)"

Anybody who needs a lawyer to understand that shouldn't be trading here to begin with.

With the Folio section of IR being down, I can't get an exact percentage of how many notes are listed for higher than 5% markup.  I can say, it's very, very high, with most of those probably being owned by Core!

Core....out of curiosity, how many notes do you currently have up for sale on Folio.


Thank you, for that staggeringly obvious statement. However it may not just be a matter of "understanding that", as you so eloquently stated. I'm more interested in hearing a less flippant legal response concerning how this addendum may or may not affect future LC actions pertaining to, among other things, the reversal of trades. Of course I'm not a lawyer, but since everyone is throwing there 2 cents in, let me suggest 2 possible short term scenarios. 

Scenario 1 is that this "advisory" type statement may be nothing more than pre-IPO CYA & ultimately of no real consequence to anyone.

Scenario 2: I could also speculate that this is an indication of additional intent on LCs part that has already & will continue to have some very real consequences for the small number of individuals who have shown notable ingenuity & skill, enabling them to enjoy some nose bleed inducing return numbers to date..............But some of whom perhaps have lacked the wisdom, imo, to speak a little softer publicly (or not at all) about their exploits, thereby creating the conditions for inevitable countermeasures. 

New Jersey Guy

  • Hero Member
  • *****
  • Posts: 914
  • Hell Yea it's a Hemi!
    • View Profile
    • Email
Re: New FOLIO Trading Agreement
« Reply #10 on: September 11, 2013, 11:34:46 AM »
".....thereby creating the conditions for inevitable countermeasures. "

Such as what?
The most obvious and easiest solution would be to put a markup cap on Folio listings.

Otherwise, what?  Throw people out because they are making money?
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

GS

  • Sr. Member
  • ****
  • Posts: 413
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #11 on: September 11, 2013, 01:48:50 PM »
Not a lawyer here, but it sounds to me more a like a statement to protect the sellers, not the buyers.  I wouldn't worry about it cutting into the note flipping side of the platform, if anything, they seem to be saying "tough luck" to the people who overpay.

cfb

  • Full Member
  • ***
  • Posts: 132
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #12 on: September 11, 2013, 03:45:56 PM »
Not a lawyer either, but its a statement to protect lending club and nobody else.  Its the standard CYA for "What?  I lost money?!?  Nobody warned me!!!1!  I'll sue!"

Its also why they stopped saying that nobody with 800+ notes lost money, and why they cut the expected returns by ~3%.  CYA.

rawraw

  • Hero Member
  • *****
  • Posts: 2793
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #13 on: September 11, 2013, 04:01:08 PM »
No idea why the yelling or whispering your Folio returns would matter.  It's not like LC doesn't have the data at its disposal . . .

DanB

  • Hero Member
  • *****
  • Posts: 665
  • A lie told often enough becomes The Truth!
    • View Profile
Re: New FOLIO Trading Agreement
« Reply #14 on: September 11, 2013, 05:42:57 PM »
No idea why the yelling or whispering your Folio returns would matter.  It's not like LC doesn't have the data at its disposal . . .

I've always been into cars & racing etc. One of the more stupid things we did when we were young & stupid was a couple of "donuts" right in front of the police station, before speeding away. Never got chased, never got in trouble. I'm guessing the result would have been a bit different if we had done it on officers appreciation day, filmed the whole thing & then posted it on youtube.