In World Stock Markets Should Be Banned (If they are not already)

In World Stock Markets Should Be Banned (If they are not already)

The bank ban was sad but it was needed. It was easy for anyone to set up a bank and then, if they wished, simply run off with deposited money. Even now we see that very few banks have been able to come up with depositor’s L$ and many probably never will. The reason LL banned banks is because there was simply no way to tell which were scams, and which were not. That, and because L$ can be traded for real world USD$ they may be breaking several international laws of banking. There were several banks which shut down operation even before the ban and simply ran off with their depositors’ money.

The ban restricts anyone from paying out any form of direct return or interest. This should include in world stock markets. People buy in world stock because they expect a RETURN in the form of dividends and/or stock value growth. This violates the new policy. Even if there is a way to “skirt” the issue, the policy should be amended to include these stock markets. There has been at least one actual exchange, which has run off with the deposits of all of their customers, amounting to many many thousands of real USD$. On the exchanges which still exist, there have been many many “CEOs” which have taken raised IPO funds and left world with them leaving their investors with nothing. It is much easier to fill out an application at a “stock exchange”, raise the IPO funds and run than it ever was to open an in world bank. To even try and avoid such scams, Linden Labs would have to try and be a regulatory body, verifying the real world names of the exchange operators AND their investors and as per the LL blog post on in world "banks" LL, understandably, has not the capacity nor the will to do so.

Then there is The Patriot Act issues. 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 USdollars, 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.

As per the above mentioned points, I am requesting that (if virtual stock markets do not already fall under the new ban on virtual finance/banking) that the policy is amended to include them. The banning of such institutions will help to stabilize the SL economy, shield LL and SL from possible liability in a legal suit, and will protect the SL citizens from further abuse and scams, while at the same time insuring that LL and the SL community is not violating federal exchange laws or The Patriot Act. We all know the banning of these stock markets is imminent. Let’s ban them now before they grow and even more people are hurt.

Thank you.

I was under the impression that the new rules applied to any kind of in-world financial institution that would require regulation in real-life?

Hello. That is how LL should have stated the ban. The problem with the current working of the ban is that it is not clear. Many of the in world banks which still owe people money are trying to skirt the ban by renaming themselves, "business groups" and such, but are still running in the same fashion as before and many, without a doubt will open more, which will again act just like the old Ponzi Schemes of the past. Just say, "We don't offer direct returns or interest!" and promise people a part of whatever you invest in. People will still go for it and get scammed and such an operation in real life is still regulated.

The stock exchange operators are trying to say they don't pay interest or direct returns. BUT, dividends are a direct return and stock value growth is an expected return. Then there are many "bonds" on the markets, which pay a set interest payment. The stock exchanges make it easier to scam people than the banks ever did.

In summary, and as you said, LL should amend the ban to clear up any questions. The ban should simply state, "Any bank, stock exchange, exchange, investment club, investment scheme or any financial operation is here by banned unless you have a valid license granted by a real world government entity to run such an operation."

That may even shut down the 3rd party L$ currency exchanges, which would further protect the citizens of SL from scams and bring in more revenue for LL. There are simply too many holes in the current policy, which will only lead to LL having to make additional bans, which will only get them more negative press and hurt the SL economy. Lets get this over with now, rather than later. Most of these operations, if not all, are illegal anyway.

Edit: LL also says that in world stock exchanges would be banned, but it would depend. Depend on what? They violate the new policy, they are in all likelihood illegal in real life, and they get people scammed all the time/scam people all the time. Ban them now rather than later. No grey area, just an all out ban. And amend the bank ban to include ALL financial operations, which would need regulation in real life.