CAPEX Implements Circuit Breakers

CAPEX has become the fore-runner in encouraging market responsibility and implementing market controls to prevent the radical manipulation of prices of shares and to prevent market abuses. As part of this ongoing process they are now implementing circuit breakers at 50% changes of trading value to allow investors to reconsider how they are pricing their shares in the market and to allow exchange heads to ensure that the reason for price changes are in fact legitimate and fair market forces versus manipulations.

CAPEX is the first market to use these tripwires to protect investors and hopefully it will continue to advance its leadership in market regulation, fraud prevention, and investor protection measures. I would encourage all markets to follow this lead.

Trying to get Ginko Assets back to Ginko Bondholders.

I just completed a long interview with Intlibber Brautigan, mostly over the BNT price slide and the sources of its cause. I found out something rather ironic and interesting about the situation that BNT is in. The trail leads back to the Ginko Bank collapse. The news for once, is not bad, but good.

I've known Intlibber for a while, he's a good friend. Generally I trust him and he's never fallen through a deal with me personally, so I trust what he says. From what I hear from others I've spoken to who have met him personally, he's an upright individual who truly is trying to run one of the best operations possible in the second life business environment. That said, his company has not been in an ideal position of late in terms of share value so it makes it difficult to write a story about it, until you know the source of the issues that BNT has been having.

If what I am to understand is true, when Ginko collapsed it had about 11 million shares of BNT that were registered in Nicholas' name. During the collapse Ginko liquidated about 3 million of this all together. 8.75 stayed under Nicholas' name until BNT moved to ACE from CAPEX. Intlibber wanted to do the right thing and find a way to get the value of the shares back to Ginko bond holders.

According to Brautigan; to do this he trusted Shaun Altman with 8.75 million shares under the agreement he would not sell the shares at less than 20% under NAV (approx .48 as of last financial disclosure) and that he would do the best possible to maximize former bond holder returns. Once the cash was collected, it could be given to Lukeconnell Vandeverre of the World Stock Exchange on the condition, and i quote:

[4:08] IntLibber Brautigan: shaun will publicly give Luke the money on condition he delivers an immediate and final dividend only to the GPB bondholders.

The question is whether or not a list of these bond holders still exist. Many of the shares of companies that have gone bankrupt on WSE, where GPB was listed, are no longer individual listings, but integrated into the WTF trading fund. A fund that many in the market recognize as a sad consolation prize for owning a defaulted or bankrupt stock that has not been properly accounted for in liquidation of assets.

If the last list of bond holders cannot be found anywhere, I probed Intlibber on what would be done with the funds. His statements were to the effect that he would not keep the funds, but he's promised that if the bond holders could not be located the money would go to a worthy second life charity. Given that his own shareholders have suffered so long in the weight of Nicholas' shadow, I've suggested that he may want to just reinvest it into BNT, perhaps even nullify the shares Nicholas owned so that there's a smaller outstanding share count. He objects to the nullification of shares in that he believes the value of the investment should be returned to the community which was damaged by Ginko.

Shaun supposedly has been straining against the reigns of his responsibility yet which have yielded to some questionable business market offers, but Intlibber has assured me that the situation is well under control and Shaun will be kept under his responsibility and that if trust is violated, another person may be chosen to lead the charge for those that owned Ginko Bonds.

As a footnote to this article, this is a huge challenge the two are undertaking and I want to note as a former ginko bond owner that there are going to be individual investors in the market who really appreciate your efforts gentlemen, Shaun and Intlibber, if you succeed.

Eliminated Moderation

This is my first time evaluating blogspot's functionality. I am removing moderation as I think it is to restrictive and to cumbersome in implementation to constantly maintain when I'm expecting a lot of traffic and am a strong advocate of free speach. That said, all moderation has been removed, all comments to date published. Pardon the slight delay. Hopefully this will not lead to excessive flame content.

Glug Glug Glug. Sinking ship? Or sank and just bubbling?

Okay. As if the news were not bad enough, another delisting from the WSE lists today, ACE (do not know how long this link will last). Two more freezes also while waiting response from management. I heard from someone a long time ago that THI/TGB were sinking ships. Given Chau Mu is on my friend's list and rarely shows up these days I'm not surprised by the news in tandem with the whispers of my market friends. In this case I don't think the WSE is as responsible, from what I know THI was thriving at one point and if the CEO is simply temporarily away for events in reality, it may still be thriving. Some, however have speculated THI was merely a Ponzi and I long ago pointed out, during the first great exchange wars, that the information for the CEO was not valid for anyone I was able to verify in the state of TX. I guess now this is just a waiting game. Good luck WSE administration and lets hope Chao is still around.

Crazy Month

The usual drama.

November came in about as bizarrely as the holiday that precedes its open for Second Life financial markets.

The Midas Group Bank debacle.

Yet another bank has supposedly "bankrupt" that being Midas Group Bank, which formerly traded on the WSE. There's a whole lot of drama around this story as well. Supposedly the CEO had the bulk of his assets in Hope Capitol Bonds. I don't know how long it will last, but here's what all the fuss is about. It may not be long before the last url is wiped from the google records, but for now it should be viewable and should display the following:

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Dividend and Bond Payment History

This page provides Dividend/Bond Payment History. Bond Interest payments are known as the Bond Yield and are paid either monthly or quarterly to bondholders. Dividends are a share of a company's earnings, paid either monthly, quarterly or annually, decided by the board of directors to shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (i.e. dividends per share or DPS). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.

Dividends Posted by Midas Group High Yield Bonds (MGB)

Posting Date:	September 15, 2007
Period From:	September 15, 2007
Period To:	September 15, 2007
Outstanding Shares/Bonds Issued at Posting:	138,857
Total Payment:	L$1388.57
Payment Per Security:	L$0.01

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It's the last trace of information on MGB that Hope Capitol has not erased from the web.

It's not uncommon for the World Stock Exchange to completely erase all traces of any company that's gone utterly bankrupt. It makes sense from a management standpoint to remove such thing as they definitely detract from the attractiveness of one's market, but the greater concern is how is the World Stock Exchange going to to handle this situation? Given the claims, MGB had assets in Hope Capitol, owner of the World Stock Exchange, itself. If this is true, how will asset distribution for the failed company be handled? I personally have no objection to MGB being declared bankrupt. I know a little bit about Midas Commons from an earlier encounter in the SL Markets.

Few know this, but when I was COO for AVIX, I screened some of our ipos. Of which, to date, only one has failed that I screened and that was CYB, they completely forged their credentials. I had the unsavory job of filtering out the good from the bad, the wheat from the chaff among the many business ideas that will be presented to a trading exchange for sale as equity. I evaluated business plans, characters, and attitudes. When Midas Commons approached me, he had presented the IPO plan for his bank in a casino parlor. Atop that, he had utilized high pressure tactics in order to attempt have me force the IPO to the floor faster. What he didn't know, is that as COO, I didn't have issuing authority, only the CEO did. I merely gave my thoughts on whether or not a business was in fact legitimate and had an operating basis. He had claimed the CEO said I should rush his review process, which does not make sense. This smelled like fire to me, and when the time came, I talked to Investor Allen, who was CEO at the time.. and the IPO was rejected. I didn't alert most others in the markets, because sometimes companies on hard times can pull themselves from the brink. Given the new light on the identity and past of Investor Allen, I find this most ironic he turned down Midas. But to to summarize, I knew he was desperate and that his businesses which were already listed on the Word Stock Exchange, must already be failing. So if Lukeconnell Vandeverre declared the man bankrupt, something he's never done before to any other stock, there had to be good reason. If Midas had truly hedged his entire company on Hope Capital Bonds, it was one of the most foolish decisions in the Second Life markets to date. You never invest everything in any one security as a bank or a portfolio manager, it's just very wrong and excessively risky.

However, if this was the reason for the destruction of MGB and it did in fact have assets then Lukeconnell Vandeverre needs to be finding a way to get that value back to shareholders. I'm afraid just diluting ownership of both deposit holders and bond holders to WTF would not qualify as financial justice and would only serve in further dilution and damage done to Ginko Bond Holders and other victims of unethical business operators on the WSE. The price is already through the floor, this would just serve to drive it further through the floor.

The ultimate solution: Compensation MGB shareholders at the average market value of MGB for the past 72 hours that it was trading on the stock exchange prior to its freeze and closure, as; being a former very small quantity bond holder myself.. (maybe 2-500 bonds total at the most) which I used for day trading, the price was very very low as it was compared to issuance. Surely there must be that value left in assets somewhere for MGB if it had HCB assets. If not, at least publish an accounting of what MGB had, what was accessible, what was dissolved. Supposedly the WSE stands on ethical principles. I call on its administration to demonstrate those principles as best it can by providing full disclosure of the incident in some fashion that is easily accessible to the public.

While the SLEC (Second Life Exchange Commission) has called for a boycott by investors and a self-delisting of WSE companies, I only see that causing more damage to the victims and rather pointless. The trading public has returned to the WSE time and time again, and I'm sure it will again. I would just like to see Hope Capitol act with a greater responsibility towards its in world clients. After all, responsibility is also a virtue, it just isn't mentioned directly in the the virtue list. I also encourage greater research into the operating capabilities of any given business plan, verify whether or not these companies can operate and that their ideas are feasible before allowing them to issue capitol. It will take time, it will take effort, and verifying character is difficult, but in the end it will be worth it. The more events like this continue, the more damage is done to the SL Markets and WSE specifically. Eventually there will not be an investing public and all SL corporate business will be rendered worthless, versus micro-cap.

The BNT tightrope.

Due to some capitolization deals gone awry, BNT which trades on the Ancapistan Capitol Exchange is in the unsavory position of having some internal investors wanting out at a price well lower than NAV, capping their stock price around .30. Unfortunately, with market activity on ACE being described so far as lackluster at best, I don't see an immediate remedy and the situation may last for some time. That said, there is a lot of potential for volatility on the issue and it should be watched closely although Intlibber Brautigan has assured me personally that the situation is well under control and that as part of an active trading deal, the internal shareholder in question is limited to only dilute at a minimum of NAV - 20%. FYI, that's about .48/share.

BNT also has a heavy influence in the SLEC, which is likely why the SLEC is taking such a heavy hand with the WSE and encouraging its destruction at every opportunity. Lukeconnell Vandeverre was offered a membership on the SLEC at one time when the SLEC was more fair and balanced with all exchanges having their say, but recently the influence of Ancapistan has made the commission a little more hostile than normal, especially without a balancing voice from the WSE on board.

The Other Exchanges (ISE, DSE, CAPEX, VSTEX).

The other exchanges have been relatively quiet and uneventful since the beginning of November with a little bit of an upwards creep in share prices across the board on most exchanges and a slight increase in trading activity, perhaps indicating a gradual confidence rise is settling in these markets. VSTEX is seeing more activity with new offers and ipos. DSE has added an IPO and is trading slowly as typical for a very lightly advertised and inconvenient to access exchange. CAPEX and ISE have seen mild fluctuations with no significant news to report. And remember, while my reports are as comprehensive as possible, do some footwork and trade at your own risk. It's a wild second life.

On a side note, my thanks to the SL Financial Wiki, for starting a record of the past others may seek to clean from the internet.

PS. Please be kind enough to visit a sponsor :-)

For more on the Midas Group story, you may want to look at another perspective amidst the firestorm: Delicious Ideas: FED UP!!