Thread:

This is complete bullcrap - CA telling me what I can't do with my money.

So I had this idea for sometime, thought of it back when I was in college. I didn't know there was an actual application of it. www.prosper.com is the idea. A website that links private lenders with borrows.

So here's the bull. I register, I have a ~$100-$300 month of beyond disposable income that I would like to try and grow in investment over paying down low interest debt that I have. CA has speical rules for participating in this. CA is ok with me buying loto tickets. CA is ok with my gambling at an indian casino. But CA is NOT ok with me lending to fellow citizen that are trying to build buisness because I do not meet their requirments.

The state of California has financial suitability requirements.

1. Financial Suitability Requirements:

To purchase a Note from Prosper, you must meet one or more of the following suitability requirements. For purposes of these requirements, you and your spouse are considered a single person.

1. (i) You must have had an annual gross income* of at least $85,000 during the last tax year; (ii) you must have a good faith belief that your annual gross income* for the current tax year will be at least $85,000; and (iii) the total amount of Notes you purchase cannot exceed 10% of your net worth**; or
2. (i) Your net worth** must be at least $200,000; and (ii) the total amount of Notes you purchase cannot exceed 10% or your net worth**; or
3. (i) Your net investment*** in Notes cannot exceed $2,500; and (ii) the total amount of Notes you purchase cannot exceed 10% or your net worth**.

My net work is beyond negative, I won't be at 200k for a very long time. Even when I own my house, my cars and a toy or two my networth wont be 200k. A bum has more networth than me on paper. But still, these requirments are rediculus. I can put 16k/year in my 401k and watch the market eat it alive but I can't invest $1,000-$3,000 a year in trying to grow my networth another and in my opininon a more sound way.

What a joke.

Add: Screenshot

Did you paraphrase, cut and paste all that? It appears that those three things are indepentant of each other. The way it reads makes little sense, ergo CA law.

You are much more likely to earn $85 in given year making that an attainable, althoug goofy, requirement. Does the requirement drop for a married couple?

Originally Posted by RodnJen

Did you paraphrase, cut and paste all that? It appears that those three things are indepentant of each other. The way it reads makes little sense, ergo CA law.

You are much more likely to earn $85 in given year making that an attainable, althoug goofy, requirement. Does the requirement drop for a married couple?

It makes sense. I don't agree with it for a second, but I see the sense in their nonsense. Basically, even if you have no income, or a low income, but have enough assets that they figure your stable and can afford the loss of 10% of your net worth. If you have no net worth at all, then you need to make at least 85,000.00 a year. The whole thing is bullshit. You could have 6 kids or no kids and it doesn't matter? Typical "mother hen governement law" Just what we need. Bigger more powerfull overseeing government. All for the benefit of the ignorant.

Maybe they figure if you make 85,000 you can't be so stupid that they need to think for you.

I don't understand what gives them the right to do this. I added a screenshot of the webpage on the first post.

Never seen that before, but it seems a lot like the "vested" requirements for investors.

There are similar requirements for being considered "vested", and I THINK it has to do with being secure enough financially to be able to lose your' capital without going destitute?

In addition, there are a LOT of "loan sharking" scams and laws on the books to prevent them.

My income qualifies me as being "vested" so I am able to legally make say a $30K outlay on a venture within CA.
More accurately, the investment group is able to legally receive it.

The limits are lower for "non-vested".

( I have only started learning about this in the past year, so have limited knowledge about it, some on here are far more learned on these requirements and laws)

Icy, I see your point but you have a lot of history working against you here. The CA atty general is trying to avoid being flooded with millions of poor peeps complaining that they were ripped off.
The investment is in the nature of a security, and securities have disclosure requirements - for small investors. Larger investors are supposedly sophisticated enough to waive them.

Originally Posted by SBjet

Icy, I see your point but you have a lot of history working against you here. The CA atty general is trying to avoid being flooded with millions of poor peeps complaining that they were ripped off.
The investment is in the nature of a security, and securities have disclosure requirements - for small investors. Larger investors are supposedly sophisticated enough to waive them.

This is exactly what it is. Stupid people fall for scams and get rich quick BS, as well as completely misunderstand realy true investments that do carry some risk. Stupid people(read majority) think giving money to someone for investment is like money in their savings account.

Still doesn't make alot of sense that you can dump way more than you can afford to lose into a 401 and nobody says anything. But then, thats covered by federal investment and security laws. This appears to be a Calif company and has to deal with state finace and lending laws.

Bottom line, people are stupid, greedy, lazy, and whiner that are sue happy. Imagine CVX losing money in this deal, and you are the Cal state Attorney General. Hwould blame everybody, including Bush, and never take a bit of the resposibility for himself. Now, imagine 5 million CVX's. You would write a similar law too!

Originally Posted by Icy

The netwroth definition is only liquid cash, like stocks, bonds ect. A house, car or anything you have to sell on the market can not be counted.

I wonder what the penalty is for this if you don't actually meet the criteria.

Jail.

Originally Posted by Icy

The netwroth definition is only liquid cash, like stocks, bonds ect. A house, car or anything you have to sell on the market can not be counted.

I wonder what the penalty is for this if you don't actually meet the criteria.

I have never heard net worth described like that.
Networth is nothing more than asset worth minus obligations.
Liquidity, now thats a different story.

Originally Posted by gn7

I have never heard net worth described like that.
Networth is nothing more than asset worth minus obligations.
Liquidity, now thats a different story.

Yeah I just noticed it in the defenition, I keep looking at it because I'm f-en pissed.

It states: "In calculating your net worth, you should only include assets that are liquid, meaning assets that consist of cash or something that could be quickly and easily converted into cash, such as a publicly traded stock. You shoudln't include any illiquid assets, such as homes, home furninishing or cars."

This is such a joke, written by a f-en career student and politician I gurantee it. That's not even networth at that point, it's like semi-liquid investments.

I'm 100% leaving CA when my grandparents pass. I imagine they won't miss the $10,000+ I pay in state and local taxes each year.

Originally Posted by Icy

Yeah I just noticed it in the defenition, I keep looking at it because I'm f-en pissed.

It states: "In calculating your net worth, you should only include assets that are liquid, meaning assets that consist of cash or something that could be quickly and easily converted into cash, such as a publicly traded stock. You shoudln't include any illiquid assets, such as homes, home furninishing or cars."

This is such a joke, written by a f-en career student and politician I gurantee it. That's not even networth at that point, it's like semi-liquid investments.

I'm 100% leaving CA when my grandparents pass. I imagine they won't miss the $10,000+ I pay in state and local taxes each year.

So they even go so far as to define NET as LIQUID NET.
You know the saying, it takes money to make money.
I have heard similar requirements in long term investments. Some have much more restrictive requirements than that.
Anybody remmber this little fiasco a few years back? This was the warnng shot that should have warned the government that is/was companies too big to fail.
This deal had the potential to cause almost as much destruction to the system as the housing bubble. And yet, the government DID NOT bail them out with tax payers money. Oflamo handled this whole thing very badly.

LINK: LOng term Capitol

Originally Posted by Icy

Yeah I just noticed it in the defenition, I keep looking at it because I'm f-en pissed.

It states: "In calculating your net worth, you should only include assets that are liquid, meaning assets that consist of cash or something that could be quickly and easily converted into cash, such as a publicly traded stock. You shoudln't include any illiquid assets, such as homes, home furninishing or cars."

This is such a joke, written by a f-en career student and politician I gurantee it. That's not even networth at that point, it's like semi-liquid investments.

I'm 100% leaving CA when my grandparents pass. I imagine they won't miss the $10,000+ I pay in state and local taxes each year.

WTF??? I love Cali. It would be a nice place to retire, if it weren't so fucked up. So I guess if you see me there, I'll be staying in a travel trailer, motel, or tent!