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Independent Audit Confirms Industry-Best Returns of P2P Lender Prosper.comIndustry-First Independent Audit Demonstrates a Model for Transparency in P2P Lending, Verifies Prosper's Industry-Leading Returns (January 26, 2012)
SAN FRANCISCO, CA -- (Marketwire) -- 01/26/12 -- Following a year that ended with 178% year-over-year growth, Prosper, a peer-to-peer lending marketplace for personal loans, today announced that Ashland Partners & Company LLP has released the results of its independent audit of investor returns on Prosper.com. The independent audit represents a first in P2P lending, setting the stage for full transparency and return on investment (ROI) verification.
The report confirmed Prosper's 10.69%(1) annualized seasoned rate of return, net of fees, for the period of July 1, 2009 through September 30, 2011. This is the first time an accredited, independent organization has conducted a comprehensive audit of P2P lending returns.
Ashland is a leading provider of compliance consultation and verification services to the investment management community, with offices in the U.S., Shanghai, Tokyo and Seoul. Ashland is specializes in GIPS verification and consultation.
"Our investors need the highest degree of confidence in the transparency, accuracy and reliability of our high-yield P2P lending returns," said Chris Larsen, Prosper's co-founder and CEO. "We conducted this audit because we believe that high minimum standards, full data transparency and rigorous self-regulation are critical to earning customer trust and protecting the long-term viability of this industry."
Prosper contracted Ashland to conduct a comprehensive audit of its individual loans and operational infrastructure in accordance with attestation standards established by the American Institute of Certified Public Accountants. Ashland examined a specified Schedule of Performance for the Prosper All Rated Notes by Vintage Month Performance Record for the period July 1, 2009 through September 30, 2011.
Prosper is the only P2P lender to report seasoned returns, which it first reported in October 2011. Seasoned returns are a more conservative and accurate indicator of returns, reflecting a loan or portfolio of loans that has matured enough for the performance to stabilize. This return is thought to more accurately reflect the true underlying return of the asset.
On November 4, 2011, Prosper held the industry's first P2P Lending Performance Measurement Summit to discuss the need for industry performance measurement standards in the U.S. Prosper senior executives discussed the need for rigorous analytics, full transparency of metrics and a call for seasoned returns in P2P lending. Prosper requested the audit by Ashland Partners & Company to establish the first set of P2P lending standards.
"Prosper is committed to regular audits of its returns to verify our performance and continue to earn the trust of our investor community," said Joseph Toms, chief investment officer of Prosper. "As the peer-to-peer lending industry continues to experience such dramatic growth, we look forward to continuing to set the industry standard in reliable investor returns, and transparency and accountability."
Prosper Marketplace Inc., a peer-to-peer lending marketplace that brings together creditworthy borrowers with individual and institutional investors, allows people to invest in each other in a way that is financially and socially rewarding. Individual and institutional investors invest in minimum increments of $25 on loan listings they select. In addition to credit scores, ratings and histories, investors can consider borrowers' personal loan descriptions, endorsements from friends, and community affiliations. Prosper handles the servicing of the loan on behalf of the matched borrowers and investors. Prosper was co-founded by Chris Larsen, co-founder of E-LOAN. Prosper has raised $83.85 million in venture capital and is backed by financial and technology luminaries including, Jim Breyer of Accel Partners; Tim Draper of Draper Fisher Jurvetson; David Silverman of Crosslink Capital, CompuCredit; Omidyar Network; Capital One Co-founder Nigel Morris of QED Investors; Court Coursey of TomorrowVentures; Larry Cheng of Volition Capital.
Notes offered by Prospectus.
(1) Seasoned Return calculations represent historical performance data for the Borrower Payment Dependent Notes ("Notes") issued and sold by Prosper since July 15, 2009. To be included in the calculations, Notes must be associated with a borrower loan originated more than 10 months ago; this calculation uses loans originated through November 30, 2010. Our research shows that Prosper Note returns historically have shown increased stability after they've reached ten months of age. For that reason, we provide "Seasoned Returns," defined as the Return for Notes aged 10 months or more.
To calculate the Return, all payments received on borrower loans, net of principal repayment, credit losses, and servicing costs for such loans, are aggregated and then divided by the average daily amount of aggregate outstanding principal. To annualize this cumulative return, it is divided by the dollar-weighted average age of the loans in days and then multiplied by 365.
All calculations were made as of September 30, 2011. Seasoned Return is not necessarily indicative of the future performance on any Notes.
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