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PROSPER MARKETPLACE, INC. * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER DOCKET NO. CO-10-7859-S |
I. PRELIMINARY STATEMENT
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, PMI, through its execution of this Consent Order, voluntarily waives the following rights:
1. | To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-20(c) of the Act, Section 36b-27(a) of the 2010 Supplement, as amended, Section 36b-27(d)(2) of the 2010 Supplement, as amended, and Section 4-177(a) of the General Statutes of Connecticut; |
2. | To present evidence and argument and to otherwise avail itself of Section 36b-20(c) of the Act, Section 36b-27(a) of the 2010 Supplement, as amended, Section 36b-27(d)(2) of the 2010 Supplement, as amended, and Section 4-177c(a) of the General Statutes of Connecticut; |
3. | To present its position in a hearing in which it is represented by counsel; |
4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
5. | To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, PMI, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them, yet admits sufficient evidence exists for the Commissioner to enter a stop order denying effectiveness to its pending securities registration, an order to cease and desist and an order imposing an administrative fine against it:
1. | The entry of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act; and |
2. | From at least July 28, 2010, forward, PMI sold unregistered securities in violation of Section 36b-16 of the Act, as amended, and the 2009 Consent Order, which forms a basis for the entry of a stop order denying effectiveness to PMI’s securities registration pursuant to Section 36b-20(a) of the Act, as amended, an order to cease and desist against PMI pursuant to Section 36b-27(a) of the 2010 Supplement, as amended, and the imposition of a fine against PMI pursuant to Section 36b-27(d) of the 2010 Supplement, as amended. |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting PMI an opportunity for a hearing;
AND WHEREAS, PMI through its execution of this Consent Order, represents to, and specifically assures the Commissioner that none of the violations alleged in the 2009 Consent Order or this Consent Order shall occur in the future.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, PMI, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing on it the following sanctions:
1. | PMI shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation, rule or order adopted or issued under the Act, including but not limited to, offering and selling securities in violation of Section 36b-16 of the Act, as amended, and the 2009 Consent Order; |
2. | No later than the date this Consent Order is issued by the Commissioner, PMI shall remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of Five Thousand Dollars ($5,000) as an administrative fine; |
3. | PMI its affiliates and successors in interest shall retain Connecticut legal counsel sufficiently experienced in state and federal securities law compliance and not unacceptable to the Division Director to evaluate PMI’s compliance with the Act or any regulation, rule or order adopted or issued under the Act. The scope of legal review contemplated by this paragraph shall include, without limitation, securities registration and disclosure obligations as well as registration requirements for any individual or entity, regardless of title or designation, performing securities-related services on behalf of PMI, its affiliates or successors in interest. PMI shall identify such Connecticut legal counsel in writing to the Division Director prior to the Commissioner’s entry of this Consent Order; |
4. | For three years from the date this Consent Order is entered by the Commissioner, PMI, its affiliates and successors in interest shall consult with such Connecticut legal counsel at least once each calendar year, provided nothing herein shall preclude more frequent consultations should the need arise; |
5. | By December 31st of each year to which the obligations described in paragraphs 3 and 4 of Section IV of this Consent Order extend, PMI shall file with the Division Director an annual sworn affidavit verifying that it has fully discussed its Connecticut compliance responsibilities with Connecticut legal counsel and that, in connection therewith, PMI, its affiliates and successors in interest are complying with the Act, the Regulations, this Consent Order and with the advice of counsel. The first affidavit shall be filed no later than December 31, 2010, the second affidavit shall be filed no later than December 31, 2011, and the final affidavit shall be filed no later than December 31, 2012; and |
6. | Should PMI, its affiliates or successors in interest sever their relationship with the Connecticut legal counsel identified to the Division Director, PMI, its affiliates or successors in interest shall apprise the Division Director in writing of the reasons for such severance within thirty (30) days following such severance, and shall identify the successor attorney engaged to perform the services described in paragraphs 3 and 4 of Section IV of this Consent Order. |
V. CONSENT ORDER
NOW THEREFORE,
the Commissioner enters the following:1. | The Sanctions set forth above be and are hereby entered; |
2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against PMI based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by PMI and reflected herein are subsequently discovered to be untrue; |
3. | Contemporaneously with the Commissioner’s entry of this Consent Order, the 2010 securities registration of PMI shall be made effective under the Act; |
4. | In the event that PMI fails to abide by the terms and conditions of this Consent Order, PMI consents to the immediate entry of a stop order and/or the imposition of a One Hundred Thousand Dollar ($100,000) fine, knowingly, wilfully and voluntarily waiving its right to notice and an administrative hearing in conjunction therewith; provided that, prior to invoking this paragraph, the Commissioner shall provide PMI with an informal opportunity to demonstrate its compliance with this Consent Order; and |
5. | This Consent Order shall become final when issued. |
Issued at Hartford, Connecticut, | _______/s/_________ | |
this 13th day of October 2010. | Howard F. Pitkin | |
Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Sachin Adarkar, state on behalf of Prosper Marketplace, Inc., that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Prosper Marketplace, Inc.; that Prosper Marketplace, Inc., agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Prosper Marketplace, Inc., consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
By: | __________/s/__________________ |
Name: Sachin Adarkar | |
Title: General Counsel and Secretary | |
Prosper Marketplace, Inc. |
State of: California
County of: San Francisco
On this the 8 day of October 2010, before me, Michelle Donnelly, Notary Public, the undersigned officer, personally appeared Sachin Adarkar, who acknowledged himself to be the General Counsel and Secretary of Prosper Marketplace, Inc., a corporation, and that he, as such General Counsel and Secretary, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as General Counsel and Secretary.
_____________/s/_________________________
Notary Public/Commissioner of the Superior Court
Date Commission Expires: February 6, 2012