I think it is both. The regulation is removing the upside risk as well as the downside risk. Many professional investors are investing to real stupid things and losing their money, it is not that difficult to find examples.
Some people lost a lot of money on prosper.com, and at least in some cases, it was known that it was money they couldn't really afford to lose. See e.g. this (and be sure to read the last comment): http://www.bloggingawaydebt.com/2007/01/would-you-lend-75000...
I've tried to find more up to date information on him since that post is over 7 years old now and can't. Do you have anything more current or more details on the user pensioner?
ericscc.com appears to be gone as well as any of the other prosper forums I've found links to. Not really familiar with the site so is it basically dead or moved out of p2p or something?
