ZEN's governance speaks for itself.  I believe ZEN to be a real company and I treat it as such, even if we only operate in-world.  At the appropriate time (if that time occurs) it will incorporate under appropriate laws, and I am prepared to defend every decision I've made, as is our Chairman, as is our COO, as is the balance of our management in full faith of our shareholders and clients, who are fully informed of our operations.  I can see where you are getting at though, and I can appreciate the weight of what you are saying.  Know that I am aware of it fully.

Regarding investment clubs - here's a link to the US guidelines:
http://www.sec.gov/investor/pubs/invclub.htm

I don't have the time to read through it now, so I would invite everyone to read and draw thier own conclusions....I would also invite others to post links to their own guidelines because I would be interested in learning more about international law.

I have another thought though - actually two. 

1) What do we think the impact is on the our community's economy from the monetary outflow that occurs to fund "SL that operate in RL" companies?  If that money were to stay in-world what would have occurred?

2)  Perhaps Hugo's is onto something with the investment club idea, and if done in full compliance of the appropriate law (meaning the hosting exchange explores and implements fully lawful procedures in consultation with an investment attorney) whats to say this couldn't be a lucrative and RL lawfully legit line of business for the exchanges?  It would require RL identity of all participants and other things, but he might be onto something.  (If it could be done, and Im not sure it could be because of other complications, but its my attempt at out of the box thinking....Perhaps VSTEX could easily host - need to see what the Italian law is, etc,etc.)


Thoughts?

Last edited by AshleighWade (2009-06-10 13:00:03)

itchygamba wrote:

AshleighWade wrote:

1) What do we think the impact is on the our community's economy from the monetary outflow that occurs to fund "SL that operate in RL" companies?  If that money were to stay in-world what would have occurred?

Actually I would hope that eventually it would increase the monetary inflow for our community.  Sure AON has removed $4000US from the economy but if Hugo is as successful as he is planing to be, then eventually he will be bringing more than the initial $4000US back into the economy to be paid as dividends.  So I can definitely see it improving the economy for the exchange community.

However I'm not sure if it would affect the economy of the whole of SL but thats mainly because I don't think the exchanges have much affect on the rest of the community. There are way to few content creation business's listed to have much of a connection to the actual SL economy, actually there aren't that many land companies either when you take a look at the size of the entire estate market.  Also, I wouldn't be surprised if the people who bought shares in AON actually brought lindens which they wouldn't have otherwise brought in order to buy the shares.  I think there are quite few people who are trading that no longer use SL except to transfer funds between exchanges etc.

I also hope AON will increae the monetary inflow of the exchanges. One info: When BDVR paid like 250k in dividends in this dificult year, all the market experimented an bull trend, most of this trend was cause a lot of company had shares of BDVR and could pay divs to their shareholder..or it not cause our div, cause our increase in price and they could sold with large profits. And yes it not correct to say "AON removed" 4000 usd, cause i boght my sahres with money I bring from outside, as other people did.

About your post Ashleigh, is clear that by the american law (and the spanish too) an investment club can´t offer IPOs, and that kind of financial offers. But AON can´t .....and no other companys here can launch IPO without being a real company, cause be a compnay is a premise for an IPO. So we all have the same problem. Probably the best for AON  is not be an investment club and yes  a private invetment firm.

You said something some posts ago, and I think is the most close to true we can agree. The problem is more about the size of a fund than it regulation. NObody is gonna say somethign about AON if is less than 100k Usd (and this amount is not much even). So, I will have to be really worried (and all yours) when somethig start to be very big. By the moment is an educative fund in SL with a few usd dollars. For me and for the other compnays, investment funds or not.

RL is RL and SL is SL. Unfortunately, we can exchange $L currency into real one. If it wouldn't be then your educative product would make much more sense. However, we all know that SL will not change their policy. They probably will if suddenly RL regulation would be obliged to step in as it was the case with banking or casino activities.

But perfect Hugo, you create your investment club and if done you present us here your project we then can vote about...

If your product is covered by a legal regulation of some sort then I will not oppose it anymore.

Personally I don't understand why you listed a similar product already at ACE and are trying to expand here without having solved the legal issues. I think it should be the first thing you have to do as you are dealing with RL. Bagatelle or not.

Just one question we are sitting here debating whether a company can list on this exchange correct, when in fact the true question is why is so hard for all to this that unless any of the Exchanges become real exchanges to which they are covered by rl laws instead of debating whether this company will affect the SL economy because atm these exchanges that are being run aren't rl, so until they can actually be covered by rl laws why are we debating the harm that could be brought buy a figment of a virtual world economy company...

I am neither defending AON nor LEM just stating shouldn't we be more worried about the exchanges themselves, as far as I'm concerned I trust Ashley in more modes amongst this realm then others, he has constanting show returns and values, I myself am a young CEO just placed in a position as such and I look for you Andy and the types like that to guide me....

What's the real intention of this thread?
As far as I can see AON is listed at ACE, doing a SPO there, having placed money for the put options there.
We have read some announcement from 4th of June:

AON infomative note
What happen to your investment in AON is ACe become not solvent or bankruptcy?

NOTHING.

Any contextual or structural problem of ACE doesn´t affect AON. This exchange is only an intermediary for bussineses and AON have no cash deposited in this exchange. All our cash is deposited at Interactive Brokers UK.

Every day AON´s CEO make a backup of the shareholders list, so your representative property is safe of any problem of any market.

Hugo Leckrone
AON CeO

It should be added that the put options would be worthless in the case of ACE's bankruptcy.

All this gives me the impression, that Hugo doesn't trust anymore in the exchange, where he is listed.

I am pretty sure an IPO application at ISE would have been denied (like PIZBI) some months ago. I agree with casper on most topics. But maybe things have changed, but I have no idea how it would go now, since there is still no BOD installed at ISE and Cocky isn't around here.

Moving from one exchange to another seems to me like getting out of the frying pan into the fire.

HugoLeckrone wrote:

AnjaDrevnerussky wrote:

It should be added that the put options would be worthless in the case of ACE's bankruptcy.

.

And why this?

Because the money is in a locked ACE account.

ACE has the full amount in a separate escrow account. We will adjust the escrow at the end of the IPO if necessary.

http://ace-exchange.com/forums/topic/745

Personally I don't believe in a complete failure of ACE, but if ACE listed CEO talk of these scenarios, they should be considered with all consequences.

Last edited by AnjaDrevnerussky (2009-06-11 15:54:37)

It's not me who "creates alarm". If you are talking of bankruptcy of an exchange, with which is dealt properly, it's needless to say that the listed companies aren't affected at all, unless they have assets within the exchange. It takes a lot of naivity to believe that in the most unlikely case of ACE's bankruptcy all seperate accounts would be paid out. I advice to read the ACE forums concerning paying to paypal or bringing companies to the floor after IPO. Do you really think your money deposited is liquid at any time? If yes, then it's true: you ARE Maria Magdealena, lol.

RL is RL and SL is SL until some cracks the glass barrier by losing a LOT of money and suing.  We have established that it can be done, for instance with the "sex bed" suit. 

But I have yet to see any activity come from the rumblings about the SL financial industry.  I think this is because a) the money is not enough for any one source to justify action and b) attorneys generally laugh when you tell them you want to pursue action against someone that you may or may not know the real identity of, and where your loss was quantifiable in a limited license, among other things.  They will probably think you stupid for putting your money into such a risky place without protecting yourself in RL as well. 

So the moral is, folks don't put in any more money than you can afford to lose, and know your companies well.  Stay active and involved in the companies you invest in.  It's 100% risk of loss out there, even with hedging instruments that have yet to be proven in SL as a true hedge.  That's not a knock to the numbers gurus, but until we can see that it works its still risky.  Its unproven.  Let's not forget that the only real example of this type of strategy was enacted on May 11, 2009.  Puts are NOT insurance against collapse and are just as risky as the investment itself, even if the CEO locks his funds (or was it the company's funds)  into a protected account. 

The instruments are being alluded to as if it were insurance and in reality they are not.  They are bets and are highly subject to manipulation in the market by people seeking opportunity.  Hugo has highlighted the risks in the AONp prospectus, but the PR on this seems to be a bit different.

-------------------------------------------------------------------------------------------------------
Which reminds me - anyone else see this story?
http://online.wsj.com/article/SB124468148614104619.html

A Daring Trade Has Wall Street Seething
Texas Brokerage Firm Outwits the Big Banks in a Mortgage-Related Deal, and Now It's War
By GREGORY ZUCKERMAN, SERENA NG and LIZ RAPPAPORT

A canny trade by a small brokerage firm in two markets at the heart of the financial crisis has left some of the biggest players on Wall Street crying foul.

The trade, by Amherst Holdings of Austin, Texas, was particularly galling to the big banks because it turned what they believed was a sure-fire profit into a loss.

The burned banks include J.P. Morgan Chase & Co., Royal Bank of Scotland Group PLC and Bank of America Corp. Some banks have reached out to two industry trade groups about Amherst's actions, and the groups are reviewing the transaction, according to people familiar with their thinking. "It's all-out warfare" between the banks and Amherst, said a senior banker at one firm that lost money.

At issue is a move by Amherst to boost the price of bonds to avoid paying out on credit-default swaps it had sold. Banks are questioning whether Amherst set them up by selling credit-default swaps and then rendering them worthless.

Amherst says it didn't do anything improper, but took advantage of an opportunity when it emerged. A lawyer reviewed and blessed the strategy for the firm, according to people familiar with the matter.

Privately held Amherst says it acted in good faith trying to limit losses for clients, who had sold credit-default swaps on the securities. "We wouldn't jeopardize our business and reputation by entering into an opportunistic trade knowing what the outcome would be," said Amherst's chief executive, Sean Dobson.

The dispute echoes battles over the largely unregulated credit-default-swap market during last year's financial turmoil. Companies including Morgan Stanley accused investors of using the insurance-like contracts to hurt the value of their shares, creating a panic among other investors and the firms' clients.

In 2007, a group of hedge funds led by Paulson & Co. suspected Bear Stearns of plotting to boost the value of subprime-mortgage securities. At the time, Bear (which was later bought by J.P. Morgan) denied planning to engage in such transactions.

So far the latest dust-up has been all words, in part, bankers say, because they are wary of attracting more regulatory scrutiny at a time when lawmakers are planning major reforms in the largely unregulated derivatives markets, long lucrative for banks. While the banks' combined losses from the trade were in the tens of millions of dollars -- modest by recent standards -- they are the buzz of Wall Street as firms try to prevent a repeat of the episode.

The trade involved credit-default swaps and securities backed by subprime mortgages. The original securities had been sold by Lehman Brothers and were backed by $335 million of subprime mortgages mostly on homes in California made at the housing bubble's peak in 2005, according to the prospectus.

Following a wave of refinancing and defaults, only $29 million of the loans were left outstanding by March 2009, half of which were delinquent or in default, according to a performance report by Moody's Investors Service.

Believing the securities would become worthless, traders at J.P. Morgan bought credit-default swaps over the past year from Amherst, according to people familiar with the matter. Credit-default swaps act like insurance, paying off the buyer if securities are hit by losses. Other banks including RBS Securities, which is the U.S. investment-banking arm of Royal Bank of Scotland, and BofA also bought swaps on the securities from different trading partners.

The banks had to pay up for the protection, similar to a person buying insurance on a beach house just before a hurricane. They paid as much as 80 to 90 cents for every dollar of insurance, the going rate last fall according to dealer quotes, expecting to receive a dollar back when the securities became worthless over the coming months.

Traders can buy credit-default swaps on securities they don't own. At one point, at least $130 million of bets had been made on the performance of around $27 million in securities, according to a person familiar with the matter.

In late April, traders at some banks were shocked to find out from monthly remittance reports that the bonds they had bet against had been paid off in full. Normally an investor can't pay off loans like that but if the amount of outstanding loans falls to less than 10% of the original pool, the servicer -- or company that collects mortgage payments from homeowners and forwards them to investors who own the securities -- can buy them and make bondholders whole.

That's what happened in this case. In April, a servicer called Aurora Loan Services at the behest of Amherst purchased the remaining loans and paid off the bonds.

Although Amherst won't provide specifics and won't comment on its arrangement with Aurora, it doesn't deny that it took this approach. (Aurora says it is a subsidiary of Lehman Brothers Bank, but not part of the Lehman Brothers Holdings bankruptcy filing.)

A spokeswoman for Aurora says these servicer provisions are customary and when rights are exercised it ensures that appropriate requirements are met.

When the bonds got paid off, the swaps became worthless, meaning the banks effectively forfeited what they had paid for the insurance. J.P. Morgan lost millions, while RBS and BofA suffered minimal losses, said people familiar with the matter.

On April 28 representatives of banks including J.P. Morgan, Goldman Sachs Group Inc. and UBS AG's UBS Securities held a conference call to discuss the trade but didn't come to any conclusion, according to people familiar with the matter.

Amherst is the antithesis of the big Wall Street banks. With its Austin headquarters and around 100 employees, the 15-year-old firm has long been a player in the mortgage market, but is now one of the upstarts trying to take business from banks weakened by the credit crisis. The firms has hired bankers, mortgage traders and research analysts who had left banks such as Bear Stearns and UBS, while raising new capital to expand its trading activities.

Since the mortgage securities were valued at just $3 million or so in the market, well below the $27 million they were redeemed for, traders believe Amherst entered into an uneconomic transaction to profit from its swap positions.

Firms that suffered losses as well as some that didn't have brought the trade to the attention of two financial industry groups, the Securities Industry and Financial Markets Association, and the American Securitization Forum, which are considering their concerns, say people familiar with the trade groups' thinking.

Critics of these markets say such conflicts aren't a surprise. In secretive, over-the-counter markets "there are hidden risks and fault lines that don't show up until times of stress or when people are losing money," says Martin Weiss of Weiss Research, an investment consultancy in Jupiter, Fla., not involved in the trade.

Many credit-default swap contracts that were written on subprime mortgage securities over the past three years remain outstanding, and holders could lose out if more bonds are made whole. Deutsche Bank has sent a list, reviewed by The Wall Street Journal, to its clients of more than two dozen other mortgage pools that could see similar moves.

Last edited by AshleighWade (2009-06-11 18:54:40)

This story that I posted was an interesting story about the "opportunity" for manipulation in an unregulated environment.

If the puts don't strike then on Sept 1, 2009 you make a nice amount of money.  You don't have to work too hard.  If you and a group collude to corner the market price of AON ensuring it won't fall, then the put is useless, regardless of a "bet against you" or any action you take good or bad.  It's possibly subject to manipulation.  AON only has 12,000 shares in float so it is easy to control the price of something that tight.  It is what it is. 

We will see where it goes.  AON has only been in existence for 3 months and AONp for a little less than a month.  You have only been a CEO of SL public companies for six months(starting at BDVR) from what I can tell (please correct me if I am wrong about this).  It looks like in that time you've made some good choices, but you also have struck quite a controversial note with both new and established figures in our community for various reason.  It's still too early to make any call about what's working and whats not.  Bottom line, I hope you make millions of linden for you and your shareholders, and wish you the best on that front.  In fact, two of your shareholders are people I greatly trust in SL, Enky and Del.  It just seems like you quite an aggressive agenda, and like I said it just give me pause.  That's all.  For the record I voted undecided....

Last edited by AshleighWade (2009-06-11 20:21:24)

Anyway, the votation have been 50% all the time, now even the YES option is loosing for a bit.

I was just wondering about our posibilities. Under 75% I consider we are not well accepted. But I never thought seriosly to move here, cause is a big decision.

Thanks for all those giving me their support. Also Thank you for those opposited to me, cause they made me think. Sorry is somebody feel hurt with my words or my irony, but is only rethoric. Also I like to show the incongruous point of view of some of the people involved in this debate. With that Im happy.

Cause, even after bein refused for more than 50% of the votes. I want to give a prize to ISE shareholder for take they time to vote and read. Cause that, all people interested in 1 AON shares, please, type here your name.

To this offer, everybody, even if was gratificated in a former offer can take it this now.

I only ask to send me a notecard in-world, saying they are not goign to sell their share for 1 year.

Thank you, and see u in the way.

AshleighWade wrote:

My agenda is different.  I want solid companies first, that produce steady returns for the long term , with as little questionable legal action as possible and as ethically right as I can get.  I don't want to be greedy, and I don't want to take on too much that I can't handle.  The market is littered with ruins of people who thought they knew the marketplace and don't.  This is not a rational market.  It's driven by emotion.  I also don't want to make a high profile splash and I don't tout how much I've made or who's copying my plan or whats going to happen if ACE closes or goes bankrupt.  See, I've witnessed all of this multiple times over the years like a broken record.  My interest is in protecting these companies, making them solid and producing returns that are tangible for the long run.  I'm sorry that I'm not greedy, but my shareholders seem to appreciate that, and the feedback they give me says the same.  Since I work for them its all the affirmation I need.

If ACE were to combine with any platform should be SL Capex.  I was part of the creation of both of them and they have the same back end, save for modifications.  Also don't count SL Capex out just yet

"with s little questionable legal action"

¿is your business registered?

"as ethically rights as I can get" 

I dont doubt of that.

"I don´t wan to be greedy" 

Greedy is a bad word..use ambitious. But doesnmt mind this is a game.

"This is not a rational market"   

There is not one rational market.

"I also don't want to make a high profile splash and I don't tout how much I've made or who's copying my plan or whats going to happen if ACE closes or goes bankrupt."

Well, you must have a plan B and be ready if something fail. If I said what I made is for tell you that doesn´t mind that I have been here only for 6 months. Numbers talk, words fall.

"My interest is in protecting these companies, making them solid and producing returns that are tangible for the long run"

Well, this is close to the James Theory, for me is equal a company paying 1% per year than 4,6% per year.

"I'm sorry that I'm not greedy, but my shareholders seem to appreciate that, and the feedback they give me says the same.  Since I work for them its all the affirmation I need."

What kind of shareholder are those? They invest for not make profit never? ahh yes those with "gaming" money called L$. I forgot this is a game...my error from the beginning hehehe.


Ashleigh, you are a kind person  and I dont like to argue against people like you. But your bussiens is high risk as any bussines dependant of LL land policy. If you tell somebody to receive 4,6% per year to invest in a company in a game in a 3D platform, they will laugh, cause they can buy a more profitable bond of any east european country wich pay much than that.

Again, to everybody, dont have sense to invest in a company with less profits than SLG (ACE:SLG), probably inside second life is the bussines with less risk and give a good percentage per year. NOw everyone can buy SLG shares in SPO and I recomend it. Why buy bubbles with 5% dividend per year when u can buy a bussines free of risk with three times that profitability. A company that can´t improve a risk free rate, is a bubble by itself and the more rational is to liquidate that bussines and invest all in SLG.

Last edited by HugoLeckrone (2009-06-11 21:57:28)