Absolutely. Having it go this far is a setback for Prosper and its investors. My point is that even if the lawsuit is successful and the judge rules in the plaintiffs favor there is no guarantee that the amount of damages will be anywhere near the amount referenced in the lawsuit. I believe that Prosper will stay in business regardless of what happens with the lawsuit and so I continue to invest.
Care to share the basis of THAT opinion? Because the remedy for a securities registration violation is that the buyer gets to rescind any or all purchases of the unregistered securities, which means that Prosper would be forced to repurchase all such loans, for their full face value plus interest since their unlawful sale. In my opinion, buyers would get to pick and choose which loans to tender back to Prosper, since the sale of an unregistered security is a voidable, but not void, transaction. That means in essence that Prosper would have to repurchase all defaulted loans (or at least all those that defaulted before roughly the breakeven point), since obviously lenders would choose not to keep those, plus pay interest at the statutory rate on all those loans (for the many years since their origination). That is likely to be $50 million, give or take.
Even if the judge were to rule that lenders had to make an "all or nothing" rescission decision (which I believe would be wrong), the performance of P1 loans was so bad that there are still a ton of P1 lenders with negative returns, who would obviously choose rescission. That would still cost Prosper a boatload of money, though not the $50 million. I haven't calculated exactly how much, but IIRC the average P1 lender lost money on Prosper, so more than half of P1 lenders would choose rescission. So maybe the damages in that case would "only" be $25 million, give or take. But that is still probably more than enough to bankrupt Prosper.
So I am very interested to hear your explanation for your belief that "Prosper will stay in business regardless of what happens with the lawsuit" -- because that seems to stretch the bounds of logic. But maybe I am missing something that you can fill me in on.