LL’s New “Banking” Policy Should Be Amended to Include Stock Exchanges, Etc.

What do you think about this?

Are in world stock exchanges, funds, investment firms, etc. banned? Not sure, right? This should be cleared up as many are attempting to “skirt” the new policy.

I think in world finance as a whole (including stock exchanges, investment groups, funds, etc.), not regulated or registered with a real world government should be banned from SL with a clear TOS which states just that.

The new ban on “banks, interest and direct returns” in SL was unclear and “grey” if anything. Many of the banks which were insolvent are now trying to reinvent themselves as “investment groups” and “funds” which tout that they pay “no interest” but still offer “indirect returns”. Many still owe many tens of millions to their depositors. All of the banks which were solvent and actually paid people back, simply did so and closed up shop. So, from the recent bank ban, all that has been accomplished is the pushing out of legit operations while allowing old ponzi schemes and unsustainable virtual financial projects to “restructure” or “skirt” the new policy.

Then there are the stock exchanges. They should be banned as well. The CURRENT LL stance on these exchanges is not clear. They say that some are banned, but they are not sure which and those that are will be determined on case by case bases. Why? I have experience in the SL virtual financial industry. I have lost much more L$ via the in world stock exchanges than any in world bank. Sure, some banks have run off with invested funds or not lived up to their obligations and promised returns, but many more “CEOs” which raised L$ (money) on these in world stock exchanges have run off with IPO funds raised, never to be seen or heard from again. There was also an entire exchange which vanished overnight with every single investor’s invested L$. It is even easier for people to simply fill out an IPO application on one of these “exchanges” and run off with invested funds than it ever was to set up an entire banking operation.

Then there is The Patriot Act. In most cases, no one knows who is actually raising the funds and it can’t be verified what they are using the funds for. For all we know, it is a group of terrorists raising money for an attack on our or another’s nation.

Some exchanges try and say they are “fictional” over and over again. This is false. They may be “virtual”, but they are not fictional. A story in a book is fictional. These are real people who are raising real funds for sometimes real world companies (APEZ on the WSE). The funds raised are totaling well in to the hundreds of thousands of US dollars, soon to top a million USD$. This is no longer play money. There are "stock market games" all over the net, but not one of them uses a token which can be traded or exchanged for real world money. In SL, however, all of the stock markets, even the ones which call themselves a "game" use L$ and other virtual currency which CAN and IS exchanged for real world legal tender. This is a totally different scenario from the "stock market games" you find on the internet.

Then there are real world legal considerations. In order to operate an exchange, even one with penny stocks, there are many many regulatory bodies the operator must first be approved by. Skirting the issue with the word “fictional” is simply no longer valid. You can exchange L$ on an open exchange for real world USD$. They are not fictional. And they have value.

In summary, I feel that the new LL policy regarding the banning of “banks, interest and direct returns” is too “grey.” Simply state that any kind of financial operation which would require real world government regulation or registration is here by banned in SL, unless you are a real world, registered and regulated financial firm. It is obvious that these institutions will be banned in the long run as they are prone to fraud, scamming and are more than likely breaking real world laws. Let’s ban all of these institutions now, rather than waiting for even more people to be hurt and lose their in world savings. Not to mention the possibility that LL themselves could get caught up in real world legal suits.

What do you think?

EDIT: I should also add that LL should give the operators of such operations up to TWO MONTHS to comply, which would allow them ample time to liquidate and pay back their clients and would NOT give anyone a scapegoat to “cash out” and run off with other people’s money. LL should also offer to help in any legal action which may be taken against those who ran these operations and now refuse to pay back their clients (which LL has already said they would do.).

stock exchange isn`t exactly a bank with insanly high "returns" but as in real life, a gamble

with a crash course on reading up on how it works abit, i hope they aren`t going to ban them as they are good for companies who actually try to accomplish something while unable to on their own and instead of doing it privatly, have a more public place for it

must say i`m abit biased as the idea to do it is still running trough my head BUT a bank is associated with safety wich in SL is clearly not the case so i hope they will be allowed to remain open

I think so because Ginko basically forced their customers to use WSE which is stockmarket thus losing everything.
They did get permission. Ginko and its bank scam became hand in hand with WSE.
Just my opinion.
Truthfully I wish there was away to do class action suit against Ginko and WSE.
I have friends who lost a lot of money and lost more with WSE. They didn't sign up for WSE they were forced to use the service because of Ginko. One lost close to 100k which is around 400 usd

Yes, but still, more people have been scammed by these in world stock exchanges than in world banks AND the exchanges are more than likely violating real world laws. SL got along just fine less than a year ago without these exchanges. I'm sure it would be fine now. So now if I want to start the new SL Ponzi, all I have to do is open an "exchange". There is just not enough real world oversight. That is why regualtion exists in the real world. Too shady and should be banned now rather than later. We all know it is coming. They may even already be banned. It just is not clear.

Agreed. I have an avatar which has lost close to $300USD via the WSE all because of bogus IPOs which eventually were "delisted" because the "CEOs" ran off with the money. That and I lost money with "Allenvest" when he ran off with the whole exchange. I know now what I got myself into, but the noobs don't and it is all bad press for LL and all probably illegal.

The stock market is highly regulated in RL. It should be highly regulated in SL.

If, like the banks, they can't be regulated in SL then they should be shut down.

i`ll just set something clear first

i have no idea how the wse works exactly or what the rules are, neither have i used it

from all i`ve readup quickly to get an idea how it all operates is that the wse odes not hold the cash but the person giving out the shares, wse might pick a grain with transaction

i can`t clearly see why not use it (when all legal and with good intentions) then make up all those graphs and pretty pictures your self
ginko forced people to use the wse to have virtual toilet paper instead of virtual nothing, what the deal with the wse was/or still is i don`t know besides of alot of people losing money with the collaps of ginko

i`m just busting my butt to make a buck with wich i will need the use of such a service and make a simple version for "private" use, feels abit like reinventing the wheel atm for me tho

The Lindens would have a big problem coming up with rules that make sense for stock exchanges. There is nothing really like a corporation in world so these are really shares in partnerships right? Where do they draw the line? Do they ban owning a business, or owning a part of a business? Does the presence of central places to buy parts of these businesses make a difference, that is, would putting money into an in-world business be safer if there were no exchanges?

Yes, it would be very difficult for LL to regulate these exchanges, and that is why they should be banned, just like the banks were.

The simple rule would be, "If you want to form a financial institution or exchange of any kind, you must be a real world, regulated and registered firm with a real world government, or it is bannable." You can still start a partnership and open your in world "shop" with your buddy Joe, but you can't solicit investors through any in world "ATM" or automated process.

Best. Forum. Name. Ever.

So then the rules would still allow one to set up a cardboard shop, seek investors, then disappear with the money, as long as no scripts are used to play the confidence game. This does not seem to be a problem that can be solved simply by taking away some scripted prims.

I agree.

Virtual worlds should be for fun, with some fair reward for content providers, virtual property owners, hosting services, and of course the software providers.

I am not against a few in game people banding together to offer for resale at profit, created virtual goods and services, such as scripting, graphics, and all the other things folk take for granted within SL, as well as people and organisations falling under the first paragraph.

Neither am I against the conveniences of a micro currency to enable micro purchases and sales, providing it is administered by the software providers (Linden Labs) and policed to prevent fraud, money laundering, and other illegal activities.

It is a shame gaming had to end on the grid.....but Linden could get around that by hosting servers in a country that permits gaming (examples Gibraltar) and prohibit entry to those Sims by avatars with a credit card or Pay Pall account registered in the USA.

What I am against is second life financial services being a substitute for correct first life financial advice. Linden Labs cannot police it, offer compensation for fraud, or under data protection laws, offer first life location information of avatars without some type of court order.

Finally if Barclays or ABN AMRO Bank, Standard Life or the likes of Berkshire Hathaway wish to set up Second Life portals (unlikely but longer term who knows) that is fine. But they are all accountable and traceable in first life. Period. That is okay. Second Life none authorised individuals are not.

Just my own views folks

Sick thing is before Ginko/WSE scam merger my own local news put this guy on the news
saying how he was starting the first stock exchange, thus making it legitimate in eyes of lot of unknowledgeable people who may not know it was scam who watched this.

Just throwing an idea out there.

Why doesn't LL run its own public stock exchange? I've seen successful systems done in virtual worlds before, it might not be as robust or realistic as the current system but it would certainly be fairer.

They could add another feather to their virtual cap and another attraction for people to use their service with a well run and maintained stock exchange.

My personal view is if someone wants to invest money and play the stock market, let them, if its what they enjoy or are good at, they deserve no less support for their hobby or part time job than the person who designs skins or builds houses. To say oh its not my cup of tea so it shouldn't be allowed, as one or two in this thread seem to be hinting at, is hypocritical.

I will say this, all transactions through a stock market should be logged by LL so it can be traced to a specific individual. Running such a system should require a very specific script, perhaps even a generic object in game to do it from and come with the proviso that, if you offer the service through the machine, you are publicly liable if an exchange 'disappears overnight' in so much as the person responsible should be held accountable to the people who's money was taken.

Better yet, all stock exchanges require a special type of account tier, whereby their details are made public for all to see. This would overnight I imagine discourage all but the most committed fraudsters, which sadly do exist in any system, RL or otherwise.

-EDIT

I should add in any such system run by LL itself, they could take a percentage charge on each transaction, just throwing that in there

I think they are a little busy with the 503's to be worried about regulating a virtual stock exchange.

Sorry, but that's just not true anymore.


Lots of RL lawyers around here I'm sure they can help.


Umm, it's way too early to call WSE a scam.


Ginko bonds were converted to WTF shares at a ratio of 1:1 and last traded at 0.029.

And we'll completely ignore the fact that for a long while GPB bonds were trading at around 0.14 giving most depositors plenty of time to recover at least some of their money.

Not a bad idea.

I thought any interest bearing stock funds are covered by the ban already.

I truly doubt Linden Lab wants to assume the liability of running a stock exchange just so some people can play on it. If anyone wants to play with that kind of volatility there is always the real life OTCBB penny stocks which are SEC regulated.

Considering that WSE/Luke has the power to bankrupt any organization by saying "ur bankrupt, I'm listing your stuff for linden pennies on the linden dollar in the WTF Fund" I think it should be banned in the same way that automated banking is banned.

What this means is that if you really want this transaction to go forward, you take it out of world and hopefully RL contracts will come into play.

Actually this happened to me. I had about 15k L$ in “Midas Bank”. Midas invested a lot in the WSE and one day Luke from the WSE decided they would NOT pay their promised interest payment on their bonds. A day later Midas complained and a day after that “Luke” said Midas was bankrupt and took all of his holdings and listings and froze them which drove the bank out of business. Now “Luke” wants to place all the owed funds into the “WTF” fund which is not worth poop. There is no evidence that Midas was bankrupt, but the owner of the WSE just decided he was. Again, nothing can be verified because nothing is regulated in any way. It was probably just a way for the owner of the exchange to keep all the invested funds and drive a competing bank out of business.

Simple answer? Ban them. It is going to happened eventually anyway…

A fool and his money are soon parted. FD, your friend should not have invested so much. Even when banks and interest-bearing bonds on stock exchanges were allowed, I did not invest more than the cost of one meal per month in them. That is the problem with investing/gambling, whether in SL or RL: You spend big, you can lose big. I like you, and like your posts, but your friend is not very wise to spend so much and deserves no pity.


Colette is right. Interest bearing bonds are banned. However, investments that pay dividends are a murky area. Let's say I give you $L100 to spend on uploading textures, and you sell 20 boxes of those 10 textures. You can afford to pay me back my initial investment of $L100 plus a dividend. It's not interest per-se, but a share of the profit. Now that LL has opened a can of worms, they have to be careful of what they allow and what they don't.

Let's look at it another way; Let's say I give 200sqm to Ninjaland group, and they pay me for that tier. Is that a dividend? Should it be banned? It is tier that is paid for by my real membership dollars, which could buy lindens instead, and thus is not that different. Lots to think about....

A direct dividend on a "Bond" is functionally the same thing as interest. I don't see that being allowed to continue under the new rules.

Paying for tier - thats basically just renting, which isn't being banned.

I honestly thought that said "Bonking policy" - got me worried for a minute.

The virtual "stock exchange" has the same regulatory oversite as a virtual "bank" -- none. RL stock exchanges in the U.S. require a lot from RL companies -- Enron and Worldcom are not only exceptions in RL but they caused further regulations of U.S. exchanges. While you may or may not feel comfortable with RL exchanges, why on earth would anyone trust any money to a virtual exchange and virtual companies? It beggars belief.

Oh well, a fool and their money are soon parted, and so-called "stock exchanges" are just the latest way of accomplishing that.