SAN FRANCISCO, April 19 (Xinhua) -- San Francisco-based online lending company Prosper Funding LLC has agreed to pay 3 million U.S. dollars as a penalty to settle fraud charges with the U.S. Securities and Exchange Commission (SEC), the U.S. regulator said Friday.
The SEC said Prosper was asked to pay the penalty for its "miscalculating and materially overstating" annualized net returns to retail and other investors.
"For almost two years, Prosper told tens of thousands of investors that their returns were higher than they actually were despite warning signs that should have alerted Prosper that it was miscalculating those returns," said Daniel Michael, chief of the SEC Enforcement Division's Complex Financial Instruments Unit.
Founded in 2005, Prosper was the first peer-to-peer marketplace lender in the United States that offers and sells securities linked to the performance of its consumer credit loans, according to the company's website.
The SEC said the 14-year-old company excluded certain non-performing charged off loans from its calculation of annualized net returns that it reported to its investors between approximately July 2015 and May 2017.
Due to an error that Prosper was aware of but failed to fix in time, the online lender overstated annualized net returns to more than 30,000 investors on individual account pages on Prosper's website and in emails soliciting additional investments from investors, said the SEC.
Without admitting or denying the allegations filed by the SEC, Prosper agreed to reach the settlement that led to the 3-million-dollar penalty, according to the U.S. regulatory commission.
Prosper claimed it has served more than 900,000 customers and facilitated over 14 billion dollars in loans for them since 2005.
