Seeking to become the third P2P Internet-based platform to complete registration of notes with the SEC, United Power and Media, Inc. (UPM) filed Form S-1 on Sept. 3 (SEC file no. 333-169240).
UPM lender members would be eligible to buy Borrower Member Payment Dependent Notes issued by the company. By making an offer on a borrower member loan request posted on the UPM platform, a lender member is committing to purchase a Note equal in principal amount to the dollar value of that offer at the stated interest rate and term, if the loan is funded and subsequently originated by UPM, or by an alternate institution to be selected in the future. The proceeds of the Notes will be designated by the lender members to fund corresponding borrower loans and subsequently allocated to a trust account for the benefit of the borrower.
LendingClub Corp. was the first P2P company to have its registration of Member Payment Dependent Notes declared effective in October 2008 (file no. 333-151827). Once registered, P2P sites must daily report detailed information about the loans they originate. On its website as of 9/10/10, Lending Club indicates it has issued $155.4 million in loans since 5/1/07, and has declined loan requests for $1.5 billion.
In November of 2008, the SEC instituted cease and desist proceedings, pursuant to Section 8A of the Securities Act, against Prosper Marketplace, Inc. The SEC labeled the loan notes that Prosper issued to investors as securities and said the company violated the Securities Act between January 2006 and mid-October 2008, by selling securities without an effective registration statement or valid exemption from registration. Prosper agreed to a settlement with the SEC and consented to the entry of a Cease and Desist order, in which it neither admitted nor denied liability, which was approved by the SEC on 11/20/08. The order cited the definition of a security under two Supreme Court cases as the basis of its judgment that Prosper's notes qualify as securities.
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