Lessons in FM: Part V - Gains and Losses

Note: This is a continuation of the series Lessons in Financial Mathematics. Reading previous posts about this topic may aid in your understanding of this article, but may not be necessary for this one. Also note that this topic is by request.

I got an email from a reader asking me to shed some light on the mystery of how to calculate your portfolio return from a mess of buys and sells that is done over the course of a period of time (the reader suggested one month). To be honest, this is not an easy problem. Even Maelstrom Baphomet has (more or less) admitted defeat on this issue.

Please take note that the tracking of financial position is a question perhaps better posed to accountants, but I'm going to show you how I would do it. I'm going to use some techniques accountants will (hopefully) recognize, but without some rigidity they demand. I will also be publishing another Lesson in FM which will be a continuation of this topic, but dealing with how to find the rate of return for your portfolio over a given time period.

I'm first going to tackle the problem of finding the (Linden) dollar value of your return and then address the problem of calculating the rate of return for the given time period. Throughout this article, I will be using one month as the time period in question.

For those of you wanting to track your gains and losses precisely, I'm going to need a few things from all of you who want to know your gains and losses.

• First, keep track of every transaction you make, including date, ticker, share amount, and share price on Excel. A few of the exchanges also allow you to download this information. I'll be starting with a CapEx download style and building from there.
• Secondly, make sure you have some way of notating which is a buy and a sell. I'm going to use separate columns for each type (debits and credits, anyone?).
• Lastly, if you can spare a few seconds, having some notes in your spreadsheet will help you out greatly when you look over it later.

It is now is a good time to talk about realized vs. unrealized gains. By now, I'm guessing most of you know by now that the value your portfolio shows at most exchanges is a fictitious number. The only way to achieve such a value would be to sell every one of your shares at the last traded price, plus the commission. While this is normally not possible or practical, even trying to get an idea of the liquidation value may be impossible, as most exchanges show only the top bid/ask prices for each security, and you may have more shares than that to sell (liquidate). Thus, if you can't tell what the whole market's prices are, you have no way of knowing how many Linden dollars you could get for your shares.

Because of this, unrealized gains can be nearly impossible to track. I'm going to give you a way to track the realized gains/losses (things that either directly cost you cash or gave you cash) and let you estimate the unrealized gains/losses as you so choose. To find the total profit/loss, then, just add the two. For the rate of return calculation, you will need to estimate your unrealized gains/losses, but for the realized portion it is not necessary.

To compute realized gains/losses, you need to know how much you have paid for a security. At first, this may seem like a nightmare, as you may have purchased different amounts at different prices, making some sort of odd average seem very difficult. However, if we just use some Excel commands, we can easily compute the total number of shares held along with how much was paid for them.

Here is a spreadsheet with some transactions (all made-up) for the month of December. Apologies to any companies whose tickers I used inadvertently. I've only got 8 transactions in there to keep life simple, so that readers can check my formulas without too much trouble if need be. I've also listed the beginning and ending balances for the month. The bolded portion of the worksheet represents the part that comes straight off of the download from CapEx - everything else I've added. (Note that because the CapEx format lists cash flows from sells as negative and buys as positive, you must subtract the sum of those cash flows rather than adding them to your beginning balance.)

You'll have to do some scrolling to see the full worksheet. What I've done is separate out the buys and the sells so that I can add them more easily later. I've put buys on the left and sells on the right, and done it for both the cash value traded, as well as the number of shares traded. IF() statements are very useful for doing this quickly.

In Excel, there is a very nice command called SUMIF, which takes the following arguments: SUMIF(lookup_range,condition,sum_range). "lookup_range" refers to the range where the condition is located. "sum_range" is then the corresponding range to sum if the condition is met. For my purposes, the ticker symbol is a nice condition to sum on. Using SUMIF, you get the small chart I have at the bottom-right.

I want to go over the formula I have in the "realized gains/(losses)" cell, however. It reads:

ROUND(Cash_In - Cash_Out * (Shares_Sold / Shares_Bought), 2)

What I'm doing is averaging what your price paid for the stock was, and what you sold it for. All of this is on average. Cash_In is fine as is - you get 100% (less commission) of your sale price as a gain. The Cash_Out, on the other hand, may have been for more shares than you sold. Say you wanted to reduce your holdings in a company. You may still hang on to some shares, but you may have realized a profit on the ones that you did sell. Because of this, I'm multiplying the Cash_Out by the percentage of your shares that you sold. In the line detailing ABC, for example, the investor sold 80% of the holdings, so only 80% of the Cash_Out is applied to the Cash_In when computing these gains/losses.

The final cell calculates a basis for the remaining shares, although not complete in the strict, IRS sense of the word. However, it will provide a nice way for you to track shares carried over from month-to-month using that as your price.

In my happy example, the investor has realized L$103.79 in gains.

A few final comments:

1. I am not an accountant. Any accountants out there who would like to critique my methods, please do so.
   
2. I realize you all cannot view the formulas and that may be less than helpful if you don't have much experience with Excel. If you would like an Excel copy of this spreadsheet, email me at guardian.market@gmail.com.
3. My First Life job requires me to be pretty disciplined at Excel, but nevertheless I do make mistakes. (Every once in awhile, Excel makes mistakes, too!) Always check at least a few parts of your calculations by hand or calculator when making spreadsheets.

Happy tracking!

Merry Christmas

May the season be filled with joy for you and yours! Remember those who you hold dear, and give them what they really want - your presence.

GM

IPO Hesitations

Sometimes when a new initial public offering (IPO) comes out in the Second Life capital markets, I may read the prospectus and then decide that this company is a worthwhile investment, with a good business plan and solid management. Other times, I have reservations about buying an IPO for various reasons, some of which have become more common and so I thought I would list here. Maybe I'm off-base with my hesitations, or maybe I haven't seen something I should have. Read on, and let me know what you think of my reasons, and maybe add some of your own.

1. Big IPO with a Long Duration

In short, if I think this IPO will take a long time coming to the trading room, I won't buy it. At least not until it's much closer to selling out, and probably not even then. (A good current example of this is the ACE IPO on the Ancapistan Capital Exchange. 7,000,000 shares, with the majority of shares owned by the massive BNT? I think that will take awhile to sell out.)

The reason is because when an IPO takes a long time to sell out, investors who bought in early get nervous. Maybe First Life situations create a demand for cash from Second Life, maybe they find better investments they wish to try, but whatever happens, they suddenly have an urge to trade their shares for cash. This often causes long-standing IPOs who move to the trading room to drop below their IPO price almost instantly. Therefore, the prudent investor looking to maximize returns will wait until that price drops and buy at 90%, 80%, 50% of the IPO price.

2. Existing Businesses Suddenly Becoming Generous

"We've been in Second Life for 3 years and now we want to share the wealth!" Uh-huh. Sure you do. When I read this I think to myself that this is either a business in serious trouble or an outright "poof" scam (the CEO goes "poof" with all the money). Neither is good for my ROI, so I'll stay away from these.

3. Banks

When I see a bank IPO, a huge, flying, shimmering red flag goes up in my mind. Unless there is some major project requiring capital expansion, this screams "I can't pay my interest" to me. That's not my type of investment.

There has been some discussion as to whether or not JTF will IPO on the SLCapEx forums. Should JTF IPO, I will reduce my cash and stock holdings significantly within JTF in anticipation of its failure. The reason is because I don't think JTF needs money to IPO. They're already huge - why would they need another L$1, 5, 10 million to expand when they have somewhere in the neighborhood of L$80 million on deposit, last I heard? That doesn't make sense, and therefore taking JTF public would be a major sign of insecurity to me. Once again, readers, please comment if you have a different analysis.

4. Multiple Companies under one CEO or Brand

While this could be perfectly legitimate, it also runs the risk of "robbing Peter to pay Paul." This is a criticism I have of the LNL brand, as well as the BNT brand and (basically) it's spin-off, ACE. I would have added the Delicious brand to that list, but they recently combined their tickers into the DDE ticker on the WSE.

I would rather see one conglomeration than two or more separate and distinct companies building into the same brand. For one, bookkeeping costs (or time spent bookkeeping) is likely to be significantly less under one ticker symbol than two or more. Secondly, if the businesses are combined, then divisions doing well can help divisions which need more capital infused into them to succeed.

Also, remember that Jasper Tizzy controlled three tickers at the time of his departure, and it has since been discovered that he used the deposits of the bank (one ticker, AVC I believe) to pay for the land purchases of another (CGI). I am not accusing IntLibber or Lindsay of these dishonest actions, but I simply ask investors to be wary of the possibility and to do their homework when dealing with these companies (which they should be doing anyway).

5. Incompetent Management

If you're really hoping to hold on to this security for a few months (long-term in Second Life), then chat/talk with the CEO before purchasing. Ask them questions. Hard questions. Ask them where the money is going, what it is going to be used for, how much they expect to bring in, low estimates, high estimates, share price targets, "what ifs," etc. If they can't at least attempt to handle your questions, or worse yet blow you off, then run away fast. So long as you ask in a respectful manner, they should respond likewise.

Every company I own I've either contacted the CEO or read enough of their blog to know they're competent. One of my biggest hints that Tao Group Bonds (formerly WSE:TGB) was going to fail was that Chao Mu, the former CEO, became rather frustrated with my questions and started giving sarcastic responses. That was a big red flag to me, and I sold before my money got completely "WTFed."

These are my principal reasons why I do not participate in a new IPO on an exchange. Certainly I have missed some opportunities from my caution, but I feel that prudence is the better part of valor, and I know I've also saved myself some Lindens with these rules of thumb. As always, comments are welcome here or in-world.

Security Regulation in Second Life

Guardian's Note: This was also published at SLReports.net

By Samantha Goldflake and Guardian Market

The transcript of the 12/12/2007 meeting of the Second Life Exchange Commission (SLEC) is not very encouraging. It shows an organization struggling with its own identity, leadership, and purpose in the virtual world, all the while public voices are growing increasingly critical of the abilities of the SLEC, as well as the conflicts of interest which reside with its leadership. Two different schools of thought appear to be forming within the SLEC - one which looks at a system of punishment for companies and markets not compliant with the SLEC's regulation, the other which argues for rewarding the companies and markets which are compliant.

The first idea, that of punishment, is a natural one to strive for. It is, after all, how governmental regulatory bodies operate. If a company does not comply with their rules, they can fine, imprison, or seize assets as justified. However, in Second Life this is simply impractical. Although some systems have been constructed to incorporate this system of punishment into the mixture (such as ACE requiring that its companies who own land use BNT land, so that that asset may be seized if necessary), it simply does not carry the same weight that it does in First Life. The bottom line is that even if you do everything you can to an avatar: take their money, land, inventory, maybe even ban them from Second Life - it simply does not carry as much weight as any one of those actions would in First Life.

The second idea, that of a reward system, also has many examples in First Life. Some examples include Underwriters Laboratories (UL), The American Institute of Certified Public Accountants (AICPA), The American Academy of Actuaries and numerous others all over the world. Each of these organizations has a set of rules and standards by which membership may be granted. In exchange for abiding by these rules and keeping in good standing with the organization, a designation is awarded. For example, the AICPA awards the Certified Public Accountant (CPA) designation, which is widely recognized throughout the United States. The only form of "punishment" which the AICPA can offer is to take away the right to use that designation, and yet this is punishment enough to keep the entire organization membership in line because of how well-respected (and valuable) that designation is.

This idea, the idea of awarding a designation to those who (voluntarily) follow the set standards, is indeed practical within Second Life. What standards, how the designation is awarded, and what the designation looks like is the concern of the marketing department of the organization awarding it. The World Wide Web Consortium (W3), for example, gives links or icons to be placed on well-constructed websites which then link back to the W3 explaining what the designation means and why the website is using it. When visiting a site displaying one of those icons, then, the user knows that the designer has taken the time to make their site compliant with the W3's standards (and this usually indicates a careful and advanced web programmer as well). A similar system could be put in place for the SLEC or other investor protection entity.

The concept of a regulatory body in Second Life is impractical. However, the concept of an organization which publishes well-founded standards, evaluates applications, and awards designation(s) to those who adhere to the standards published is entirely practical within Second Life. Such an organization could earn the trust and respect of investors, as well as gain publicity through publishing said designations. This method of honoring those who abide by their standards, rather than criticizing those who do not adhere to them, could (in time) grow to be an effective method of market regulation, support, and education.

So far so good, but one should always look at the whole picture. The aforementioned theoretical organization should be formed by people with a relevant First Life background, not by self-certified or wannabe public accountants. Also it should be unbiased and not partial. Is this an obvious statement? It sure is, however it's a good thing to recall this concept, as it's a good thing to recall that actual, apparent and even perceived (by the general public) conflicts of interests should be avoided at all costs.

An award is as good as the reputation of the awarding organization. Of course everybody has to start somewhere and public trust isn't earned overnight, so at the beginning the life of an organization dealing with accounting and business standards could be hard. However, by following some guidelines problems should be greatly reduced. The organization:

• must be formed by people with relevant First Life backgrounds and enough SL experience (there are differences between the two)
• must be unbiased and not partial to any SL financial institution
• must keep at any time open communication channels with SL financial institution and the general public
• must pursue at any time consistent, coherent and continued communication about its mission, acts, targets and such
• must strive to earn and keep SL financial institutions and the general public trust
• and, its members must avoid any actual, apparent or perceived conflicts of interests.

That given, then everything is possible. After all, it's a matter of business ethics. An ethical organization will be able to win the hearts of both SL financial institutions and the general public.

The idea of an organization publishing standards and assigning designations to those who adhere to those standards is admirable and achievable. There is a big problem, however: that organization must really be unbiased and independent. It must also earn public trust. In the SL financial world we see pretty much the same faces everywhere. If not those faces, we see their friends. Are there people we can trust to form an unbiased and independent organization? Time will tell if the SLEC will be that organization, or if another must be formed to accomplish that end.

So, you're in the trading room...

Let's say you're the "Oompa Loompa Duffo Inc. SL" CEO. Your virtual company has recently gone public and you had your IPO on a Second Life stock exchange.

You did your homework and you followed the guidelines to the point; your IPO has been an outstanding success or, even if you failed to achieve that, you raised a nice amount of money and now your company has a solid foundation to build up from.

This blog post isn't about what you're gonna do with your money, anyway. This post is about you should deal with investors, present and future.

Working for a virtual stock exchange as I do can be pretty interesting. I see everything the general public can see and a lot of the things "behind the curtains" and in my 4 months (more or less) service for the VSTEX I observed some common trends.

Most CEOs will be very proactive about their IPO, but usually their excitement will tone down once they are in the trading room. It's been a month or more (in the worst cases several months) since the IPO and the company prospectus hasn't changed a word, except for the financial data (eventually). The business plan is still a few lines long and there isn't an in depth risk analysis.

Your last news item on the stock exchange website dates to a month ago, or to several months ago; and let's be honest: your last news weren't that great, short and with abundant exclamation marks.

I believe that one of the issues behind stock prices dropping to ridiculous levels (0.1x L$ per share) is lack of proper and regular communication with the investors and the traders.

You may argue that nor you as a CEO, nor your company, earns anything from people buying and selling your company shares. While that's quite true, that's only the minor part of the picture.

First, would you like the CEO of a "0.1x company?". I certainly would not, as I wouldn't be happy to be the CEO of a company who had a successful IPO and in just a month is trading at values 5, 6 times lower than the original IPO price (can you say "unhappy investors"?).

Second, your share value is part of your company (and sometimes personal) reputation. An healthy share price is perceived as the result of an healthy, well run company. It makes people want to buy your shares and your investors are maybe the first in line to buy your products or services.

Third, being perceived as a "valued company" helps you stand out from the crowd. Gets your name in the news, people look at you. And it's free advertising.

I could go on for miles on this subject, but I think I told you the most important things. When writing, you don't have to be telegraphic (unless you're writing a newsflash or a telegram), but you don't have to flood your readers with words too (unless you're writing a novel or a poem).

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Random Humor

Xavier showed me this hilarious webpage, which I recommend you all spend 10 seconds looking at for your laugh of the day. Enjoy.

Get A First Life

Lessons in FM: Part IV - Equivalent Portfolios

Note: This is a continuation of the series Lessons in Financial Mathematics. Reading previous posts about this topic may aid in your understanding of this article, but shouldn't be necessary for this one.

The last time I had checked, the Big Six and Big Eight bets had all but disappeared from modern craps tables on the Las Vegas strip. The reason is because no one was betting them. The Big Six and Big Eight bets paid even money (1:1) for a payout, but there was another bet, called "Place Six" or "Place Eight" which paid better odds (7:6) and hit at the exact same time that the Big Six and Big Eight bets did. Because of this, bettors learned that it was smarter to use the place bets rather than the large, Big Six or Big Eight bets on the corners. (To try these out for yourself, you can find a nice craps flash game, no real money used, here.)

The Big Six and Big Eight bets violated a fundamental rule of financial mathematics:

Portfolios with equivalent payouts will have the same price at all points in time.

The concept is simple enough - portfolios of investments that provide the exact amount of reward, in exchange for the exact amount of risk, will sell for the same value. If not, the market will buy the more advantageous one and sell the less advantageous other one until the prices come to equilibrium. Note that once again, this is economic argument and not mathematical proof. However, once mathematicians accept this argument, they get their (very powerful) equals sign back and begin to work their magic.

It's very difficult to frame this article in the context of Second Life finances because many of the tools used to bring this principle into practice don't exist there. Short selling, options, futures, etc. all don't exist in Second Life (yet - I'm still holding out hope), and so these strategies likely will not work there. Instead, then, venture with me into First Life and the world of financial derivatives. First, some quick definitions (with links for better explanations):

Long Buy - This is the stock transaction we're all used to: buying a stock and selling it at a later date.

Short Sell - This is selling a stock you do not own with the promise to pay it back later. You are liable for any dividends, splits, etc. that the stock undergoes while you are shorting it.

Calls - This is an option which gives the holder the right, but not the obligation, to purchase a specified security by a specific time at a specific price, all of which are spelled out in the details of the call contract.

Put - The opposite of a call, this is an option which gives the holder the right, but not the obligation, to sell a specified security by a specific time at a specific price, all of which are spelled out in the details of the put contract.

In the put and call articles of those Wikipedia links above, the authors have provided a graph on which the vertical axis shows the payout (or profit with the dashed line) and the horizontal axis shows the underlying security's price. If you sell the call or put instead of buying it, you simply invert those lines over the horizontal axis to get your new payoff/profit graph. These are shown below the first graphs.

The payoff graph for a long buy is an upward-sloping line (with slope 1). For each unit the underlying security (the stock) goes up, you get another unit of payoff and profit. As I mentioned above, if you happen to short the stock, then the line slopes down (slope = -1) and for each unit the stock goes up, you lose another unit of payoff and profit.

There is also some consideration to be given to interest in this matter. Options take place in the future, and so you have to compensate the investor for giving up their money for a period of time. This is usually done at the risk-free rate.

Out of all these graphs and rates, you can push, pull, bend, and tweak various portfolios to have the exact same payouts, even though on the face they look very different. Some of these portfolios will make even the most seasoned investor's head spin, but because of financial mathematical principles, the price can be easily calculated.

A good example of this is the put-call parity formula. This formula tells how the price of a put, call, the underlying stock, and the interest rate all depend on each other. Given any three of those, you can solve for the fourth.

Let's get an example here. At the time of this writing, the price of 3M Corporation (NYSE:MMM) was $85.93. A January 2009 call for $90 is selling for $8.42, and a January 2009 put at $90 is selling for $9.40. Using the put-call parity formula, we can calculate what the interest rate must be in order for these prices to be in line. From the article (with symbols properly translated):

Call Price + (Strike Price)/(1+i) = Put Price + Asset Price

8.42 + 95/(1 + i) = 9.40 + 85.93

i = 9.3%

Investors in the 3M Corporation believe that they must receive exactly 9.3% interest between now and January 16, 2009 (8.28% annually) in order to make these prices work. Note, however, that the put-call parity formula assumes no transactions costs. Your 9.3% rate of return would be offset by these transactions costs. Still, if you happen to be looking for a decent rate of return (and don't mind making your broker sweat in order to get it), this is something to consider.

Questions? Comments? To me, this is one of the most fascinating concepts in financial mathematics, because it allows you to construct new portfolios, new investments, new ways of moving money around and still have a good idea of what the price should be. It also allows for you to more easily see arbitrage opportunities, and exploit them if they happen to exist.

I have no idea what the next Lesson in FM topic will be. Suggestions, anyone? It doesn't have to be overly complex - if a reader would like me to take a stab at explaining a concept, I'll do my best. Just leave your thoughts in a comment here, and it'll find its way back to me.

How to Make a Stock Index

There are, as I now count, six capital exchanges in Second Life. Yet only two of them (the ISE and VSTEX) have indices to measure that exchanges performance. There is also a service which provides indices and stock graphs, SL Quotes, available for public viewing. However, none of these aforementioned indices detail their methodology for how they produce this index (nor have I tried to replicate it). I thought, therefore, that it might be illustrative for readers to think about how a stock index is constructed and administered.

First, let's think about what a stock index should and should not do. We DO want it to

• Incorporate many securities (conceivably all of them from a given exchange)
  
• Adjust for new entrants and exits from the market, splits, and (probably) dividends
  
• Reflect market performance

I think it would be safe to say that we DO NOT want it to

• Be less volatile the least volatile stock, or more than the most volatile
  
• Spike or decline sharply just because of an entrance or exit by a security, split or dividend

With those constraints in mind, I'd like to introduce the concept of market capitalization (MCAP).

Definition: MCAP = (Total outstanding shares) * (Price per share)

For Second Life, I'm going to alter that definition slightly because of some companies who have a LARGE volume of outstanding shares, but only a small portion of which is actually being traded, or in float:

Definition: SLMCAP = (Total shares in float) * (Price per share)

A market capitalization gives you an idea of how large a company is on the stock market. A company with 1,000 shares trading at L$100 is smaller than a company with 1,000,000 shares trading at L$0.50, even though the L$100 stock price is higher. This is a very important concept when constructing an index, because it demonstrates that you should not form an index by simply constructing a portfolio of one share of each stock, because larger prices can give disproportionately higher representation to smaller companies. (Such an index, by the way, is called a price-weighted index.)

You can make price-weighted indices that function well (the link I used cites the Dow Jones Industrial Average as one), but I think it gives, or could give, disproportionate weight to companies that aren't actually affecting the market that much.

In contrast to this, a market-weighted index will weight each company by its market capitalization, thus giving the larger companies more say in how much the index swings.

So how does one actually construct such an index? Well, one way to do it would simply be to add up all the SLMCAPs and leave it at that. Mathematically:

Index = SLMCAP₁ + SLMCAP₂ + ... + SLMCAP_n

However, this number is likely to be quite large and cumbersome, so instead, you need to divide it by some divisor D.

Index = (SLMCAP₁ + SLMCAP₂ + ... + SLMCAP_n)/D

This divisor is very important, because it also allows the flexibility to adjust for buybacks, new entrants, secondary offers, dividends, and removals. You'll notice that I did not mention stock splits in the above. This is because (theoretically) a stock split does not affect market capitalization (ex: 2:1 stock split. Shares double, price halves, market cap stays the same). However, any of those other events would require a change in the divisor. To do this, you simply look at all values at time t, and solve:

Index_t = (SLMCAP₁ + SLMCAP₂ + ... + SLMCAP_n)/D_new

For D_new, using all the new SLMCAPs with the change incorporated into them.

How about an example? Assume you had a new entrant into the market (a new IPO). First, you find the current index value the normal way:

Index = (SLMCAP₁ + SLMCAP₂ + ... + SLMCAP_n)/D

Then, you take that index value, and include the new company in the calculation, and solve for D_new (I've bolded the new company for emphasis):

Index_t = (SLMCAP₁ + SLMCAP₂ + ... + SLMCAP_n + SLMCAP_n+1)/D_new

You can disregard the previous D at after you calculate the new value, and go forward using the new value of D until another event occurs such that you need to change it again.

Any questions? I don't know how difficult it would be for exchange programmers to incorporate such a system into their operations. And, as mentioned above, I have no idea how SLQuotes or VSTEX or the ISE calculate their indices. However, I think that each exchange should have some sort of index following it so that investors can more easily get an understanding of how the market has changed.

To SLEC or not to SLEC

Chances are good you know what the SLEC (Second Life Exchange Commission) is. I'm not linking to their website since they don't appear to have one at the moment, with the domain they used up to a while ago featuring a "parking page".

TraderJohn Susa, current SLEC president was kind enough to invite me to the December 12 SLEC open meeting. I was not impressed. The most noticeable thing was this statement from IntLibber Brautigan:

[18:05] IntLibber Brautigan: exchanges that refuse to be controlled
should be openly publicised as refusing to behave by accepted
practices, so as to inform the investor about the risks of doing
business there

So, according to Brautigan, if you are not blessed by the SLEC then you're automatically not reliable, or questionable. As far as I know, the SLEC has not a God given right to rule the SL financial world and tell who's good and who's bad, nor it's written anywhere that it has to be the only regulatory body.

I could go for miles here, but there's so much time I can lose in a day and my quota has been met already.

Cadence Juran, one of the few voices at that meeting, raised some valid points:


[18:29] Cadence Juran: what I am refering to
[18:29] Cadence Juran: is NO member of the SLEC shoudl ever come across as THE single voice

[18:29] Cadence Juran: or no member of the SLEC should ever engage in public spats

[18:30] Cadence Juran: its about always maintaing an appearance of objectivity

Apparently nobody bought into her theories. If you ask me, who spoke against them did not even understand what she meant. At this point, who where the protagonists?

The list is pretty short: TraderJohn Susa and the "Brautigan bunch". Cadence Juran, Nobody Fugazi later, did not change my impression of an overall boring meeting, where a group was following its own agenda.

At the end, I was asked if VSTEX was going to join the SLEC:


[20:17] IntLibber Brautigan: Samantha are you considering joining SLEC ?

[20:17] You: No.

[20:17] Cliff Eclipse: hahahhaha

[20:17] Cliff Eclipse: Sorry
[20:17] Cliff Eclipse: Can I ask why?
[20:18] You: Yes, you can. But at this point we're not gonna comment on this.

When I was asked that question it was past 05.00AM where I live in RL; many times I stated in public my opinions about the SLEC and that meeting did nothing to change them.

I passed the whole meeting transcript to Guardian Market. Maybe he'll find something interesting there.

That's all folks, I know this blog post is not something special and somehow messy, anyway I wanted to share my feelings with you.

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Land Supply

Disclaimer: I'm a land dunce. By that, I mean that I've never owned any land, only have a basic understanding of tier, and do not know the history of the market.

In spite of the above, I still found this SL blog post a few days ago interesting. It looks like Linden Labs has an actual target for land prices, somewhere around L$6.3 / m, as noted in the article. The question that remains is if the market will believe that price. Any land owners here wanna help me out on this one?

The interesting aspect of this article is that in some ways, it resembles setting an target price by Linden Labs for its major commodity: land. Although Ginsu Linden warned of these economic comparisons, I still persist in my observation because of how First Life markets can react to price targets.

Think about it: when you hear a price target for a stock, car, or anything else, what comes to mind? I think the first question is whether or not the source you hear it from is credible. The bum on the corner rambling about how Google will hit $1,000 per share probably isn't your best source, but if Morningstar said the same thing, you'd pay more attention...or at least I would. In this case, I think we can classify Linden Labs as a reputable source on the matter.

However, the next item to consider is whether that price target will be accepted by the market. If the price is too far out of the current range, the market will simply ignore the target. In some of the comments on that Linden Labs blog article, it seemed as though some already have. If the market believes that price target, then it becomes a self-fulfilling prophesy, with sellers trying to sell above the price and buyers going below it, hopefully reaching equilibrium at or around the price target. However, if the market doesn't believe the price target, then they simply go on as is, and it is up to Linden Labs (who control land supply only - not demand) to attempt to get to their target.

So then, if we revisit this topic in say, two or three months, the land prices could serve as a proxy for the combined influence of two variables: how much the landowners in Second Life trust the words of Linden Labs, and how well Linden Labs controls land supply. Two variables are hard to decompose, but it still answers the general question, "can Linden Labs precisely control the land market?"

There are, of course, a myriad of other factors which could come into play in this market, and I am yet unexperienced in it. Comments are very welcome on this article, as I would love to learn about the land scene in SL.

Lessons in FM: Part III - Risk

Note: This is a continuation of the series Lessons in Financial Mathematics. Please read Part I - Present Value and Part II - Annuities if you have not already done so. They will aid greatly in your understanding of subsequent parts of the series. Although for this article, you can probably get along just fine without reading those if you really don't want to.

Risk. You've probably heard the term a lot in various contexts. Around the SL capital markets, you've likely heard of it as far as business risks, risks of default, and/or risks of de-listing. I know of one company which specializes in insurance in SL, The Rock Insurance, which is a tool used to mitigate risk. But has anyone ever defined risk for you? Beware, however, because this is a mathematical definition of risk. Finance professionals probably wouldn't accept my definition, or only grudgingly so, because of the consequences it brings. Here we go, though:

Risk = Standard Deviation(Returns)

That's it. Anticlimactic, I know. Mathematically speaking, we measure risk through standard deviation (or variance, the square of standard deviation), which can usually be estimated. Please note that this means that risk occurs regardless of whether the security in question goes up or down. Obviously most investors would rather have the risk only go one direction, up, but such is life.

In order to accurately gauge risk, we need a measure of earnings without any risk. In my classes, we defined a risk-free asset, usually United States Treasury Bills (T-bills), to be the risk-free assets earning the risk-free rate of return. Take a look at what they're currently earning here. Note that these are annualized yields - you don't really earn 2.98% in 4 weeks' time.

Anything above that risk-free rate is defined to be a risky asset. How much investors need to be compensated in addition to the risk-free rate to invest in that asset is called the risk premium, and can be computed as follows:

Risk Premium = E(Return of Asset) - (risk-free rate)

Note that I've used the notation for expected value (E(X)) here, because the return on the asset in question is risky - it will vary. By definition, the asset determining the risk-free rate of return has no risk.

So let's take a look at the risk premium for a typical bank deposit in Second Life. The SLCapEx is currently offering rates of 0.1% compounded daily. To make that an annualized rate, we take

[(1 + .001)³⁶⁵ - 1] = .44025

or 44.025% return. But, we're not done here. The SLCapEx cash accounts are a risky asset, and there is some probability that they will not pay out. We've already seen several bank collapses in SL this year, and that's the probability I'm talking about. I'm going to assume, for illustrative purposes, that the SLCapEx has a 90% chance of paying that rate of return, and a 10% chance of paying zero. Therefore, we calculate the expected value of SLCapEx returns as:

(.44025)*(.90) + 0*(.10) = .39623 = 39.623%

The risk-free T-bill had a rate of return of 2.98%. Therefore, the risk premium on a SLCapEx cash account is 36.643%! That is pretty staggeringly high, and usually those risk premiums are found only on the Las Vegas Strip.

So why aren't hordes of billionaires coming into Second Life to take advantage of SLCapEx's great rate of return? They're afraid of the risk. To them, the risk of losing their capital (and they would use more sophisticated models than I assumed above) outweighs the potential return that they could get. They are (as are most investors) risk-averse, meaning that they prefer less risk to more risk. There are some who are risk-takers, that will choose a riskier asset to a less risky asset. The third option is being risk-neutral, which means you don't care about the risk and just look at the rate of return, and I believe it's the rarest case of the three.

At this point, some pictures might be helpful. What we need is a graph to help us understand the relationship between risk and return. Fortunately, one exists, and is called the efficient frontier. What you do is you graph risk (measured either by variance or standard deviation) on the x-axis and rates of return on the y-axis. Then, by economic argument (not mathematical proof, mind you) you only take the highest rates of return for given levels of risk. What you wind up with looks something like this:


Pretty, isn't it? That line represents the best that you can do in the market. The lower dots are ignored, because investors would choose the higher dots (securities with a greater rate of return for the same risk) instead. Think about it - if you had two banks, one with a savings account at 3% and the other at 5%, you'd probably go to the one with the 5% rate of return (ceteris paribus).

There are an infinite number of points on that curve, however. How do we decide which one to take? Well, that's where your individual preferences come in via something called utility curves (or indifference curves). Actually, these are multi-dimensional functions that are often projected onto two-dimensional graphs as curves. Anyway, these curves quantify how much return you must be compensated with in order to take on an additional unit of risk. You wind up with a picture that looks like this:



You should choose the portfolio that maximizes your utility and lies on the efficient frontier. Simple, right? Well, the mathematics gets messy, but ideally (economists would like to think) we do this every day without even thinking about it.

All of this stuff falls under the umbrella of modern portfolio theory, and I encourage those interested to do some exploring on Google to see the range of topics out there.

Next week - equivalent portfolios and their magic.

----

Just a quick note: I take requests here at Second Chaos. If there's some mathematical, financial, or economic topic you'd like me to explore, let me know. I might refuse topics that I feel are too far advanced for me, but I'll gladly make articles explaining standard deviation or variance or anything like that. Just FYI.

Slightly Hidden New Post

For your information, loyal readers, I just posted the SLEC open meeting text here. I purposely altered the post time so that it would drop down a little and it wouldn't dwarf the posts of my other authors by its sheer length. I encourage those who weren't at the meeting to read it, and comment as they wish.

GM

Ethics (or lack of)

For those of you thinking SL is a game, or a "3D chat", a post about ethics may seem totally unrelated, or misplaced.

Well, I believe that no matter your opinion of SL and how you "live" it, ethics (or talking of) definitely have a place, here or anywhere else.

Ethics (and lack of) are strictly inherent to us humans. Every day we act, talk, write; there are many instances where ethics are (or should be) involved.

Before I get carried away, I'll get to the point and I'll specify that I'll be dealing with business ethics in this post. As I wrote in my first post here, I am the Director of Communication and Public Relations for the VSTEX, a "community based virtual stock exchange".

I won't go over all the issues most of us have seen, either directly or not. Most of us know that the range of "bad things" goes from CEOs running away with the company treasury to all sorts of blackmail attempts.

Those are the things getting the attention of the press and the general public. Of course on the other side there are a lot of good businesses, but as it happens in real life, most of the times who just does his business the right way, doesn't get much press. You may or may not agree with me here, but that's how I feel.

Before joining the VSTEX team I have been a "virtual trader/investor" and a few times I have stumbled on unethical people. Being in my new office I said to myself "What should I focus on, now?".

First thing was to improve the exchange rules which they are far away from being perfect now, but any improvement is a good improvement if you ask me.

Then I started digging into business ethics and that led to the VSTEX Code of Ethics and the VSTEX Public Disclosure Policy .

Of course even the best codes and policies won't mean much if you don't live by them. A Code of Ethics should not be a collection of phylosophical mumbo-jumbo or marketing jargon and at all costs shouldn't be a trap to lure people into thinking you're all good and white.

I believe ethics to be a major factor in the competition equation. SL is a social environment, a good reputation will take you up to the stars, a bad or tarnished reputation may hinder you seriously. Who will prove to be an ethical business will have a definite advantage in the race for success.

You may be thinking "So let's get ethical now", but please stop a little before you run for your desk, to write the "Ultimate Code of Ethics".

You don't learn ethics, though by reading some good documents you may improve your ethical inclination/awareness. You must have an ethical DNA. If it isn't in you veins, in your heart, you may get close, but in the long run you may give up or fail to live by your own code.

I would encourage you to discuss ethics with your team, or fellow businesses, whomever. Look around you and ask yourself "How could I do it, in an ethical way?" or "Could I be more ethical?". Asking questions, even to yourself, is a great way to learn. Great human discoveries and inventions came out of more or less simple curiosity.

As for myself, I'll see what I can do over at the VSTEX where I found a management very incline to follow my calls and ideas. Future will tell and I'm looking forward to a bright one.

Powered by ScribeFire.

Well, the secret's out and nobody cares...

So, I must first apologize for my extended absence. The fact of the matter is that my partner of almost 6 years was hospitalized with a drug allergy and staph infection this last week and, as Guardian Market likes to say... "RL > SL."

Last night I got an interesting call on my RL cell phone. I was in front of the television watching "Tin Man" on the Sci-Fi Channel.

I did not pick up (I screen my calls), but I found it interesting that it was a Dallas, Texas telephone number. I only know one person in Dallas.......



I knew it had to be serious if it really was him... considering he could not wait for me to come online. I immediately rushed to my office and logged in to Gmail. BOOM! Gtalk message from Arbitrage Wise... "Xavier!"

It was him that called... we had a situation. Well, he thought so anyways.

For the record, I have known about JuiceTrading.com for a while. It was a secret shared to me in confidence. I really saw no problem with it, and was happy to know there was in fact a real-world outlet for JT Financial, and that the interest our depositors were earning was actually backed by profit... it wasn't just unreasonable numbers in a MySQL database as I suspect is the case with a few banks.

I was not the only person that knew... by any means. I had talked privately with others that mentioned JT to me first. Some had a problem with it, most didn't. I was never a fan of this being a "secret," but as we now see there was no real reason for anyone to be concerned.

In any event, as Arb and I continued talking in Gmail he forwarded a release to me... it was a disclosure about Juice Trading and Sports Arbitrage. I formatted it, added a rough title, and put it up on SLR. We sent out group notices and proceeded to "spill the beans."

I still hadn't really read it... I had totally skipped over the failed blackmail attempt. I have a few problems with that - to say the least.

But the bottom line is that the first 24 hours in any crisis are really the most critical. JT Financial has not had a bank run, has not received any negative comments that I know of, and the CapEx forums don't seem to be buzzing about Juice Trading as I thought they would be.

Isegrim Nikolaidis is the only person to start a thread so far about Juice Trading, and it is more of a parody about the failed blackmail than anything else.

It's nice to see that nobody really cares. If nothing else, I see where Arbitrage Associates, LLC has garnered a ton of exposure with this forced disclosure, and JT depositors now know that there is at least some real-world credibility to the interest that they are being paid.

My prediction is that in a week this entire situation is forgotten and newbies continue to ask JTF staff, "How do you pay interest?" Only difference is that now they can provide an accurate answer without the fear of disclosing a company secret. :)

We'll see.

Xavier Mohr

SLEC Open Meeting Text

Guardian's Note: The SLEC meeting which happened last night, 12/5/2007, was an open meeting, and therefore I feel no hesitation in publishing the log as it was given to me by the SLEC group via notecard. I'm putting it here so that anyone not in the SLEC may read it, and so others may link to it or quote it as needed.

It appears that this has been edited, but only to make it easier to read. I also have a full script via notecard that can be distributed to whoever requests it. Simply IM me in-world.

Also, I'm going to move it down a few posts in the post order so that other authors here aren't trumped by its massive length, however. Note that to do this, I must alter the posting time. The time of this post is 5:40PM SLT 12/6/2007.

[17:53] TraderJohn Susa: Thanks for coming Ladies and Gentlemen, I just want to say a few things to you all.
[17:54] TraderJohn Susa: Afterwords, I'm looking forward to what I'm sure will be some rather lively discussion.
[17:54] TraderJohn Susa: Before I start I do want to remind you all that YOU own the SLEC, not me, not Intlibber, YOU.
[17:54] TraderJohn Susa: You joined the SLEC not so you can say, "Hey, I'm SLEC!", you joined because you believed in the Ideals of fair and ethical practices...
[17:55] TraderJohn Susa: Because you know this is no game and what we do here, today will have effects for many years to come.
[17:55] TraderJohn Susa: I'm reminding you all this because those Ideals, not the SLEC, are what's important.
[17:56] TraderJohn Susa: Regardless your opinion of the SLEC, you owe it to yourself, your peers and those yet to come to this world to hold on to those Ideals, the standards they imply.
[17:56] TraderJohn Susa: One other thing, I am responsible for anything that happens under the SLEC banner.
[17:56] TraderJohn Susa: If someone is going to be hanged for anything the SLEC did it will be me.
[17:57] TraderJohn Susa: That said, lets talk some about recent events and news.
[17:57] TraderJohn Susa: About two weeks ago, in the name of the SLEC, Intlibber sent out a communication regarding the WSE.
[17:58] TraderJohn Susa: Asside as the the exact wording and the author being in a somewhat compromising position....
[17:58] TraderJohn Susa: does anyone here disagree with it's substance? I really don't think there will be many people who'd say they don't.
[17:58] Bogart Beck: For the record I disagreed with its execution
[17:58] Cadence Juran: As do I
[17:59] TraderJohn Susa: The next was a private communication between 2 people. It was not stated to be nor was it's intent from what I have been told to be a SLEC communication
[18:00] TraderJohn Susa: The bottom line is that one personality tried to work another....
[18:01] TraderJohn Susa: one used the SLEC name to make his point and another who probably knew better decided to use it to make his own point.
[18:01] TraderJohn Susa: either way, it does not live up to the standards you should expect
[18:02] TraderJohn Susa: not form the organization you put your trust in to be the standard setter
[18:03] TraderJohn Susa: As to your points Bogart and Cadence, I agree
[18:03] TraderJohn Susa: It was not exicuted correctly
[18:03] Marc Attenborough accepted your inventory offer.
[18:03] TraderJohn Susa: That is again my responsibility
[18:04] IntLibber Brautigan: Theres more to the story than that
[18:04] TraderJohn Susa: that is fine Int, and you will have you opportunity
[18:05] Cadence Juran: quick question.. is there anyway we can conduct this in voice?
[18:05] TraderJohn Susa: what have we done so far?
[18:05] TraderJohn Susa: if you want my opinion, not nearly enough
[18:05] TraderJohn Susa: quick answer, no
[18:05] Bogart Beck: transcripted dialogue is better in this case cad
[18:05] TraderJohn Susa: headphones broke
[18:06] Cadence Juran: i agree BO.. thats why they should have a minutes taker
[18:06] You: Plus, transcript, yes Bogart.
[18:06] Patrickj Ah: Guess what you are getting for Christmas TJ
[18:06] TraderJohn Susa: we have helped to push better accounting practices
[18:07] TraderJohn Susa: but other than that, not much
[18:07] Shaun Altman: hi whats this?
[18:07] Shaun Altman: how did I get here? lol
[18:07] Shaun Altman: is this the SLEC? :D
[18:07] Shaun Altman accepted your inventory offer.
[18:08] TraderJohn Susa: the fact is we need to either do or be done.
[18:09] TraderJohn Susa: yet, with all the recent events, I really can not assume a mandate from the members.
[18:10] TraderJohn Susa: So, after this meeting I will be placing myself for a confidence vote as Chair
[18:10] TraderJohn Susa: As I said I do not own the SLEC YOU do
[18:10] TraderJohn Susa: and now, it's time you be heard
[18:11] TraderJohn Susa: I will recommend Pat Ah as acting Chair if I am voted out.
[18:11] TraderJohn Susa: but that will be for the members as a whole
[18:11] MystiTool HUD 1.0.21-freebie: Entering chat range: Sando Haller (16m)
[18:12] Cadence Juran: !
[18:12] Cadence Juran: question
[18:12] TraderJohn Susa: lol - 1 sec, Cadence
[18:12] TraderJohn Susa: not that I'm running.
[18:12] TraderJohn Susa: I intend to be very active in my support
[18:13] TraderJohn Susa: but you deserve to decide if you feel I'm the man for the job.
[18:13] TraderJohn Susa: now Cadence.
[18:13] Cadence Juran: thank you TJ
[18:13] TraderJohn Susa: :-)
[18:13] Cadence Juran: i'm revising more form a quesiton to a recommendation...
[18:14] Cadence Juran: excellent job at spin and attemtped damage controlin light of the recent events... I say this with the utmost respect for you TJ...
[18:14] Cadence Juran: HOWVER
[18:14] Cadence Juran: from a PR standpoint...
[18:15] Cadence Juran: the SLEC image and position has been severly compromised... therefor, I recommend scrubbing the current management and electing new management
[18:15] Cadence Juran: this
[18:15] Cadence Juran: way
[18:15] Cadence Juran: you can begin to earn the trust and respect of the community
[18:15] Cadence Juran: and not you specufcuakky
[18:15] Cadence Juran: **
[18:16] Cadence Juran: but the SLEC
[18:16] TraderJohn Susa: That may very well be what happens.
[18:16] Cadence Juran: specifically
[18:16] TraderJohn Susa: what you should understand is there is no spin involved here
[18:16] TraderJohn Susa: I said exactly what I mean and believe
[18:16] Cadence Juran: noited and thank you :)
[18:17] Cadence Juran: excuse my typos..lol
[18:17] TraderJohn Susa: it's ok - I type with a lisp too
[18:17] TraderJohn Susa: see, I want the Ideals to live on
[18:17] TraderJohn Susa: I want you to understand that those Ideals are your rights
[18:18] Cadence Juran: indeed
[18:18] Cadence Juran: as long as the are enforced with objectivity and impartiality
[18:18] Bogart Beck: TJ - may I have the floor for a moment?
[18:18] TraderJohn Susa: and it really does not matter what happens to the SLEC just hold those dreams
[18:18] TraderJohn Susa: feel free, this is an open meeting
[18:19] Bogart Beck: TY... I'm not convinced that the concern of most parties here is really a vote of no confidence for your contributions
[18:19] TraderJohn Susa: would be pretty shallow if it was
[18:20] Bogart Beck: what is necessary is a sincere dialogue as to what behavior is appropriate for any member Elected or otherwsise
[18:20] Cadence Juran: I agree
[18:20] Guardian Market: I agree as well - but I ask everyone to remember that we have only read one side of the story.
[18:20] TraderJohn Susa: Yes, that is quite an agreeable point
[18:21] TraderJohn Susa: that does not concern any one story
[18:21] Bogart Beck: and what measures are available and reasonable, be it censure or otherwise ehen a member of this body decides of their own accord to use this organization as their own pawn for their self interests.
[18:21] TraderJohn Susa: it's a request to review polocy
[18:21] Cadence Juran: indeed
[18:21] Cadence Juran: and a review of all confilcts of interests within the SLEC
[18:21] Cadence Juran: andf its management
[18:21] Guardian Market: Ah - I see. My mistake
[18:22] TraderJohn Susa: fair points
[18:22] Bogart Beck: is it the STORY that's of Interest here or the METHODS utilized by a member here that ultimately compelled "the story?"
[18:22] TraderJohn Susa: that is afer all the real reason for this tonight
[18:22] TraderJohn Susa: Dialouge
[18:23] TraderJohn Susa: it is more, in my opinion, eagerness
[18:24] TraderJohn Susa: I really believe Int said the correct thing in his WSE communication.
[18:24] TraderJohn Susa: No, I would have said it different
[18:24] TraderJohn Susa: and I would have definately picked a different messenger
[18:25] TraderJohn Susa: but it was a lact of forethouht by the Board
[18:26] Cadence Juran: so what steps are goign to be taken to rectify the issues that currently are at hand?
[18:26] TraderJohn Susa: so - where do we go from here?
[18:26] IntLibber Brautigan: How about more than one side gets heard?
[18:26] TraderJohn Susa: goodQ, was just about to ask that very question.
[18:27] Connie McMahon: Pehaps now any member of the board who wishes to speak should have the opportunity?
[18:27] TraderJohn Susa: Crah?
[18:27] Bogart Beck: yes
[18:27] Cadence Juran: i really believe regardless of the story and the incidents that took place.. the foundation to this entire ordeal.. is the fact that you have a severe conflict of interest within your management of the SLEC
[18:27] TraderJohn Susa: ah, almost crashed
[18:28] TraderJohn Susa: Int, you deserve the opp to be heard
[18:28] TraderJohn Susa: please go ahead
[18:28] Dwight Wilber is Offline
[18:29] IntLibber Brautigan: Firstly, the story you think youve heard has been spun by a professional, just as much of BNT's reputation has been spun by those who have sought to bring it down
[18:30] Marc Attenborough: !
[18:30] IntLibber Brautigan: I founded the SLEC in february at the news conference where Luke closed the WSE for recoding, I announced it then because in the previous three months I'd seen the seeds of abuse and corruption and felt that if SL's capital markets were to survive without government regulation, we needed a market drive solution created by the investors to set standards.
[18:30] Nobody Fugazi: Having known about JuiceTrading for some time, I have no idea that Arbitrage would think you important enough to up his schedule. :-)
[18:31] IntLibber Brautigan: I also knew that as a board member of HCL at the time, i was the wrong person to chair the SLEC due to perceived conflicts of interest
[18:31] IntLibber Brautigan: I was set to resign from HCL instead
[18:31] IntLibber Brautigan: but Luke convinced me that he was committed to the same ideals of transparency and standards
[18:31] IntLibber Brautigan: that commitment was eroded over the coming months
[18:32] IntLibber Brautigan: especially when he lied to me about the supposed actions of Shaun Altman and Anshe Chung
[18:32] IntLibber Brautigan: and manipulated me into going along with his deal to expand HCL stock
[18:32] IntLibber Brautigan: as a means of protecting the WSE from being taken over by someone I believed was only interested in allowing her friends to have access to capital
[18:33] IntLibber Brautigan: when it started to become evident to me that I'd been hoodwinked, I realized the SLEC needed to be put into action and by someone uninvolved in management of the markets
[18:33] IntLibber Brautigan: after searching for someone like that, Madelena Rossini recommended TJ
[18:34] IntLibber Brautigan: when I gave him the chairmanship to the group, I left the group entirely
[18:34] IntLibber Brautigan: and was only asked to come back to be elected to the board at the board request
[18:34] MystiTool HUD 1.0.21-freebie: Entering chat range: Kaddan Yue (10m)
[18:34] IntLibber Brautigan: I have never felt that exchange heads should have significant influence on the board of the SLEC
[18:35] IntLibber Brautigan: the problem has been in getting enough public interest and participation, it seemd like for quite a while that only the exchange heads had an itnerest in keeping their peers honest
[18:35] IntLibber Brautigan: When Arbitrage Wise took over AVIX
[18:35] IntLibber Brautigan: I was given allegations by someone claiming some things about Arb's past history that could have been damaging
[18:36] IntLibber Brautigan: I felt that they should be investigated only to determine truth or falsity, if he was innocent, then Arb should not be subject to such rumors.
[18:36] IntLibber Brautigan: I discussed this at SLCC with TJ, and was overheard by Reina Ferraris, who misunderstood the conversation and assumed I only intended to slander Arb
[18:37] IntLibber Brautigan: Arb later said that he decided then to get rid of BNT
[18:38] IntLibber Brautigan: after SLCC, the management of SLCapex aided individuals in trashing BNT on the capex forum, and hid IP information about a person who used griefing against our estate to purchase large amounts of BNT stock at a very low price
[18:38] IntLibber Brautigan: this person later hacked my SL account
[18:38] IntLibber Brautigan: and stole an ACE ATM
[18:38] IntLibber Brautigan: however in the mean time, SLCapex chose to delist BNT for absolutely no reason other than to deny BNT access to the capital markets and to damage our reputation.
[18:38] Bogart Beck: Excuse me Mr Brautigan... can you PROVE DEFINITIVELY these ALLEGATIONS?
[18:39] IntLibber Brautigan: Yes I can
[18:39] Bogart Beck: Then DO SO...
[18:39] IntLibber Brautigan: Now, Charles Granville, former partner in M2B with Thor Columbia
[18:39] ClaudeVon Streeter accepted your inventory offer.
[18:39] Bogart Beck: yer conjecture is once again APPALLING
[18:39] IntLibber Brautigan: whose alt is Charles Gantenbein
[18:39] TraderJohn Susa: Bo, let him finish please
[18:39] IntLibber Brautigan: was the person who committed this stock manipulation
[18:40] IntLibber Brautigan: Arb and Bo lied to me and claimed when I asked for his location, in asserting that this person was thousands of miles from the Los Angelse area
[18:40] Sando Haller: This is such BS. Intlibber you threw a hissy fit at the initial meeting that announced the purchase of avix by arb. You were way more than a "concerned" memeber of the financial community from day 1.
[18:40] IntLibber Brautigan: I was concerned Sando at that time because of what I'd seen with Arb extorting the original VSE out of Van Ames
[18:41] IntLibber Brautigan: and his attacks against who I believed at that time to be an innocent man, Investor Allen
[18:41] Cadence Juran: OK.. I have to ask.. is there ANY evidence of any of the claims?
[18:41] Cadence Juran: and I don't mean hearsay
[18:41] Cadence Juran: I mean hard core proof
[18:41] Cadence Juran: ?
[18:41] IntLibber Brautigan: yes cadence, and you saw some the other night too, so dont act like you dont know about it
[18:42] Cadence Juran: no what I saw was a screen shot
[18:42] Cadence Juran: which provred nothing
[18:42] Cadence Juran: and alot of he said she said
[18:42] Cadence Juran: I need to see proof
[18:42] Cadence Juran: I asked this of yo ulastnight
[18:42] Cadence Juran: and yo ukept giving me names
[18:42] IntLibber Brautigan: My staff is willing to testify to the veracity of this screen shot
[18:43] Cadence Juran: I strongly believe that if you are going to make claims.. there needs to be proof
[18:43] Nobody Fugazi arches an eyebrow. A prim!
[18:43] Pilot Schroeder is Online
[18:43] Cadence Juran: ahh yes
[18:43] IntLibber Brautigan: rather than heckling, try listening
[18:43] Nobody Fugazi: full bright please.
[18:43] Nobody Fugazi: ty
[18:43] Bogart Beck: Sando, if you will, please send me a transcript of this session. The SLANDER will STOP. I have other duties to attend to - this has again turned into a bully pulpit for a delusional pathological iar - good evening folks.
[18:44] IntLibber Brautigan: as the managers of SLCapex know, since they run the same software
[18:44] TraderJohn Susa: Let's be Civil
[18:44] IntLibber Brautigan: this is a record of an ATM's attempt to access our website, and the owner
[18:44] Cadence Juran: can you walk us through this screenshot
[18:44] Nobody Fugazi: a Drupal derivative?
[18:44] Cadence Juran: and tell all of us HOW this ties back to your claims
[18:44] IntLibber Brautigan: Charles Granville's IP address was identified by LL as the IP address used to hack my SL account on the same day as this ATM tried to access our exchange website
[18:45] IntLibber Brautigan: it therefore follows that he stole an ATM from my inventory
[18:45] IntLibber Brautigan: since ATMs only work if they are authorized by the admin backend
[18:45] Nobody Fugazi: Linden Lab gave you his IP address?
[18:45] IntLibber Brautigan: this attempt failed
[18:45] IntLibber Brautigan: yes
[18:45] Cadence Juran: can they do that?
[18:45] Connie McMahon: Yes they can
[18:45] Nobody Fugazi: that is a breach of privacy, actually. Interesting.
[18:45] Connie McMahon: Read the TOS.
[18:45] IntLibber Brautigan: LL gave me the IP address in the course of investigating why I was having problems logging onto SL successfully
[18:45] Shaun Altman: Wow, we should get some clarification from LL on the policy of giving our IPs to other residents.
[18:46] Travis Ristow: Yes they can
[18:46] IntLibber Brautigan: they rattled off the IP on my account login history
[18:46] Shaun Altman: That's downright scary.
[18:46] IntLibber Brautigan: this accounts login history is MY property
[18:46] Nobody Fugazi: The TOS and law are quite separate. ;-)
[18:46] IntLibber Brautigan: therefore I am entitled to see what IP addresses are used to log into this account
[18:47] Cadence Juran: so how does this tie back to Arb & the SLCX?
[18:47] Shaun Altman: That's not the part I was talking about. I meant the part where LL gave you another resident's IP to crosscheck.
[18:47] Shaun Altman: I gotta run though, see u all soon.
[18:47] IntLibber Brautigan: SLCX knew Charles was manipulating the market with some others to buy up BNT stock cheap
[18:47] Mike31 Dawes: the IP address in concern would be one that accessed his account. not just a random IP from another resident
[18:47] Nobody Fugazi nods at Shaun.
[18:47] TraderJohn Susa: Ladies and Gentlemen
[18:47] IntLibber Brautigan: they refused to identify him to me
[18:48] IntLibber Brautigan: and lied in claiming he was thousands of miles from where he really was
[18:48] TraderJohn Susa: I AM VERY GLAD TO SEE THIS DISCUSSION
[18:48] TraderJohn Susa: I SUGGEST WE CONTINUE IT AFTER THIS MEETINGIF YOU PLEASE
[18:48] Cadence Juran: indeed TJ
[18:48] Cadence Juran: we are way off course here
[18:48] IntLibber Brautigan: this hack of my SL account and attempted hack of ACE was on Oct 30th
[18:49] TraderJohn Susa: lol - thank you
[18:49] Cadence Juran: and hearsay and speculation without proof is rather time wasting
[18:49] TraderJohn Susa: I do like the enthusiasm
[18:49] IntLibber Brautigan: on Nov 1 DOS attacks started against ACE
[18:49] TraderJohn Susa: Ahem
[18:49] IntLibber Brautigan: mostly through proxies in Austin and elsewhere
[18:49] Cadence Juran: Move Out Of My Way, BITCH!!!
[18:49] Cadence Juran: can we on to the matters at hand
[18:49] Cadence Juran: oopo
[18:49] TraderJohn Susa: Int, later
[18:49] Cadence Juran: sexcuse me
[18:49] Cadence Juran: lol
[18:49] IntLibber Brautigan: I am not done
[18:49] Nobody Fugazi: well, I think that the security of user IP addresses is something the SLEC should explore for its own purposes - perhaps in a separate meeting.
[18:49] TraderJohn Susa: there will be time after
[18:49] IntLibber Brautigan: the public has a right to know why what happened happened
[18:50] TraderJohn Susa: this meeting is also regarding the SLEC's future
[18:50] TraderJohn Susa: Int, they will
[18:50] IntLibber Brautigan: the other night, one of my Vice presidents reported to me that JTF management had harassed her and tried to bribe her to leave BNT
[18:50] IntLibber Brautigan: that was the last straw
[18:51] Marc Attenborough: thats competition for ya
[18:51] Nobody Fugazi bribes people at coffee shops.
[18:51] Cadence Juran: LOL
[18:51] Travis Ristow: LOL
[18:51] IntLibber Brautigan: last week I had given what I knew about juice trading to TJ and Patrick and they said they'd take care of it
[18:51] Marc Attenborough: i get offered jobs all the time...thats not illegal
[18:51] IntLibber Brautigan: instead SLCapex stepped up their agressiveness
[18:51] TraderJohn Susa: Int, that is enouh
[18:51] TraderJohn Susa: you can have a conference after this one
[18:51] TraderJohn Susa: ok?
[18:51] IntLibber Brautigan: ok
[18:51] Cadence Juran: LOL
[18:51] TraderJohn Susa: TY
[18:51] IntLibber Brautigan: now
[18:52] TraderJohn Susa: I'm not stepping on you
[18:52] IntLibber Brautigan: I have always stood for the ideals of the SLEC
[18:52] IntLibber Brautigan: even when cadence and bogart have trashed it
[18:52] IntLibber Brautigan: and tried to obstruct it
[18:52] TraderJohn Susa: but we are getting to deep at this moment
[18:52] Cadence Juran: ok.. enough
[18:52] Cadence Juran: i never trashed the SLEC
[18:52] IntLibber Brautigan: sure right
[18:52] Cadence Juran: i said that yo uare a direct conflict of interest and your actions are reckless and have compromised the SLEC
[18:52] Cadence Juran: please quote me correctly
[18:52] Cadence Juran: thank you
[18:53] TraderJohn Susa: Stop or you will be ejected - my only warning
[18:53] Kaddan Yue: IntLibber cut it out
[18:53] IntLibber Brautigan: I and BNT have stood up for standards and ethics in the SL capital markets, and BNT has played fair in this economy all the way, while it seemd everybody else was using us as their punching bag and playing dirty
[18:53] Cadence Juran: lol
[18:53] Aldon Huffhines: I must admit, I'm new here and I haven't figured out what the ideals of SLEC exactly are...
[18:53] Cadence Juran: this is rich
[18:53] Cadence Juran: lol
[18:53] IntLibber Brautigan: because it seems like few actually want to have any rules
[18:54] Cadence Juran: Move Out Of My Way, BITCH!!!
[18:54] Cadence Juran: can we on now TJ?
[18:54] Cadence Juran: excuse
[18:54] Cadence Juran: ;p;
[18:54] Cadence Juran: let me turn that thing off
[18:54] Aldon Huffhines: TJ, I respect the way you started the meeting, and I hope we can focus on what the ideals should be and how we can promote them... Because so far, I haven't seen much about ideals or how they get promoted.
[18:54] Cliff Eclipse: Please.
[18:54] Cliff Eclipse: If I may interject.
[18:54] IntLibber Brautigan: Am I being told to sit or do I get to defend myself?
[18:54] Cadence Juran: TJ please take control of this meeting
[18:55] Cadence Juran: time is of the essence for all of us
[18:55] TraderJohn Susa: You are being told to sit down
[18:55] Cadence Juran: :)
[18:55] TraderJohn Susa: TY
[18:55] TraderJohn Susa: as I said I will ensure you have a proper forum
[18:55] Kaddan Yue: Question
[18:56] TraderJohn Susa: sure kadden, then marc
[18:56] Kaddan Yue: I am not understand, this meeting, what ever happened to Robert's rules of order
[18:57] TraderJohn Susa: Kadden, this is not a board meeting....
[18:58] TraderJohn Susa: and frankly a little brawling helps keep things clear
[18:58] TraderJohn Susa: A LITTLE brawling
[18:58] Cliff Eclipse: No it does not.
[18:58] Kaddan Yue: bawling should not consist of cursing
[18:58] Kaddan Yue: not in a public forum
[18:58] TraderJohn Susa: agreed
[18:58] TraderJohn Susa: that, was not a little in my opinion as well
[18:59] TraderJohn Susa: so, yes, I do owe you all an appology for not maintaining control
[18:59] You: I think Cadence was accidentally hitting gestures, Kaddan.
[18:59] You: If I may interject.
[18:59] Kaddan Yue: 3x's
[18:59] Cadence Juran: yes
[18:59] TraderJohn Susa: let's see if we can keep things forward facing
[18:59] Cadence Juran: that was my bad
[19:00] Cadence Juran: everythime I hit the letter 'M'
[19:00] Cadence Juran: i deactivated that geasture
[19:00] Cliff Eclipse: Thank you
[19:00] Cadence Juran: so my apologies if I offended anyone
[19:00] TraderJohn Susa: lets move forward
[19:00] TraderJohn Susa: we're adullts
[19:01] Connie McMahon: Not until we are verified
[19:01] TraderJohn Susa: Marc, you IM'ed with a point?
[19:01] Cliff Eclipse: hehehh
[19:01] Marc Attenborough: yes, i would like a couple of minutes to make 2 statements, if now is a good time
[19:02] TraderJohn Susa: lol - depends on the statements
[19:02] TraderJohn Susa: go on please
[19:02] Marc Attenborough: G-Rated, i promise
[19:03] Marc Attenborough: lag is killing me
[19:03] Kaddan Yue: Markc is moondancing
[19:03] TraderJohn Susa: get down with your bad self
[19:03] Marc Attenborough: Thank you TJ.... I have 2 statements to make. The first is about business and the second is tonight's vote. Please do not interupt and hold your questions until the end.
[19:04] Marc Attenborough: First of all, let me remind everyone that the goal of any public company is to provide value for the stakeholders of that company. Some companies are doing this and others are not.
[19:04] Marc Attenborough: Let me also remind everyone that companies should strive to gather marketshare and set themselves apart from the competition in a positive way.
[19:04] Marc Attenborough: The amount of mudsliging that goes on here sickens me because quite frankly.... NO company here is SO important that there would be a consorted effort to "sink" it. So please check your ego at the door.
[19:05] Marc Attenborough: Anyone who can't handle managing a challenging business shouldn't be in business. End of discussion.... now on to the next topic.... The vote.
[19:05] Marc Attenborough: As for the vove of no confidence.... TJ, I have to say that I should smack you for even thinking that.
[19:06] TheDon Kohnke: lol
[19:06] TheDon Kohnke: easy
[19:06] Marc Attenborough: I've been in the financial industry for a long time and I 've seen a lot of things.
[19:06] Marc Attenborough: In a world full of selfishness and greed, its extremely rare to find someone with strong convictions to help others and the strength to stand up for those convictions when there is no personal upside.
[19:06] Marc Attenborough: TJ, you have your flaws, but you have no conflicts of interest here, and I believe you whole-heartedly care about these people.
[19:07] Marc Attenborough: You must, because you have dealt with nothing but drama for months even though there is no incentive for you to make this work other than a "Thank You"
[19:07] Marc Attenborough: Ladies and Gentlemen, there may be some organizational adjustments that need to be made within the SLEC, however, I can think of no other resident who can chair this organization with as much objectivity and integrity as Traderjohn Susa.
[19:07] TraderJohn Susa: s I'll take that as a yes from you - lol
[19:08] Marc Attenborough: Thank you, I've said my piece
[19:08] TraderJohn Susa: Thanks Marc
[19:08] TraderJohn Susa: I'll pay you tomorrow
[19:08] Kaddan Yue: lol
[19:08] Kaddan Yue: better be careful
[19:08] TraderJohn Susa: seriously, I feel that vote is important
[19:09] Marc Attenborough: I dont take checks
[19:09] TraderJohn Susa: it's important, if for no other reason, to let the members remember that THEY own the SLEC
[19:09] TraderJohn Susa: and NO BODY is above their wishes
[19:10] Nobody Fugazi nods :-)
[19:10] TraderJohn Susa: Travis, you wanted to say something?
[19:10] Travis Ristow: Yes and I will make it brief - But for the record LOL
[19:11] Travis Ristow: More of a statement then a question from me. I have to say that I agree with the action regarding the wse, Just not the wording prcisely and the bearer of the news should have been someone else.
[19:11] Travis Ristow: Regarding the latest "news" It came from an slec member but was not an official act of the slec.
[19:11] Travis Ristow: Reform is MOST definetly needed within the slec if it is going to move forward. Attacking each other is going to get us no where - we all know that there are 2 camps here pro intlibber and pro ANYTHING else.
[19:12] Travis Ristow: This meeting is not specifically about Intlibber it is about the slec moving forward - do we want it or not? and if so lets figure out how in the heck to repair it and make it stronger.
[19:12] TraderJohn Susa: TY, yes
[19:12] Travis Ristow: Thats it.. Off my soap box.
[19:12] Cadence Juran: indeed
[19:12] Cadence Juran: I agree with Travis
[19:13] TraderJohn Susa: Does any one else want thier say?
[19:13] Mike31 Dawes: i have a single comment
[19:13] TraderJohn Susa: Mike
[19:13] TraderJohn Susa: didn't see you here - go on
[19:14] Mike31 Dawes: i've always felt it a conflict of interest for any director of an exchange to be a board member of the SLEC. It should be investors only
[19:14] Mike31 Dawes: That is nothing personal towards anyone
[19:15] Mike31 Dawes: that is all i had to add. ty
[19:15] TraderJohn Susa: Thanks
[19:15] TraderJohn Susa: Mike, I can only state what I believe
[19:16] TraderJohn Susa: The exchanges need to be part of the discussion
[19:16] TraderJohn Susa: what's more...
[19:16] Mike31 Dawes: yes as members
[19:16] TraderJohn Susa: with the type of setup we are working with in sl....
[19:16] Cadence Juran: I have to agree with Mike TJ
[19:16] TraderJohn Susa: the only hold we have is volentary....
[19:17] Mephistopheles Thalheimer accepted your inventory offer.
[19:17] Cadence Juran: all conflicts of interest MUST be dissolved in order for the SLEC to be effective
[19:17] Mike31 Dawes: I personaly would not run to be elected as my goals in business would be potential to control the process or that view could be put on me
[19:17] TraderJohn Susa: the concern was that an exchange would take the position that they were not in agreement and decide not to play
[19:18] TraderJohn Susa: yes there is a lot of pressure we can push if we decide to as a group....
[19:18] Kaddan Yue: yes then you would be saying you don't trust your self to hones and fair
[19:18] Connie McMahon: Which is precisely what has happened.
[19:18] TraderJohn Susa: it would have been easier with the exchanges assent
[19:18] TraderJohn Susa: that, however, may have been a mistake
[19:18] Connie McMahon: !
[19:18] Mike31 Dawes: no i'm saying that that viewpoint could be layed against me
[19:19] TraderJohn Susa: See people, you are the teeth
[19:20] TraderJohn Susa: how many pulled out of WSE when Luke started doing unusual things?
[19:20] TraderJohn Susa: not many
[19:20] Kaddan Yue: yes I did
[19:20] Cliff Eclipse: yo
[19:21] TraderJohn Susa: Yes, I know
[19:21] TraderJohn Susa: the point is that we need to be a MEMBERS association
[19:21] TraderJohn Susa: what we were ment to be
[19:22] TraderJohn Susa: and that because we are mirroring our members opinions and stances....
[19:22] TraderJohn Susa: we have the strength to make a difference
[19:22] TraderJohn Susa: otherwise we're just annoying
[19:22] Mike31 Dawes: I don't want the SLEC to be able to be percieved as a group thatcould favor one exchange over anyone based on the board members relationships with particuliar exchanges
[19:22] TraderJohn Susa: and I have 6 kids
[19:23] TraderJohn Susa: I'm annoyed enough as it is
[19:23] TraderJohn Susa: I agree Mike
[19:23] Mike31 Dawes: perception is key
[19:23] Mike31 Dawes: especialy with what the ultimate goal is
[19:24] Kaddan Yue: so is assumed because I work at ACE I am not fair
[19:24] Kaddan Yue: and i lean towards ACE
[19:24] Mike31 Dawes: by other exchanges and ivestors that can be the case
[19:24] TraderJohn Susa: would be a bad assumption from my expirence
[19:24] Mike31 Dawes: Kaddan i'm not saying anythign personal towards you
[19:25] Kaddan Yue: so forget how much I have lost in other places and not care about how it is exchanges are ran
[19:25] Kaddan Yue: just because I work for one, on way
[19:25] Kaddan Yue: no
[19:25] Kaddan Yue: i have a right to be here
[19:26] Kaddan Yue: I have a right to fight for what is right
[19:26] Mike31 Dawes: you ahve a right to choose a position
[19:26] Cadence Juran: indeed
[19:26] TraderJohn Susa: EVERYBODY has a right to be here
[19:26] Mike31 Dawes: yes
[19:26] Cadence Juran: I believe the issue is
[19:26] Cadence Juran: if you are management of an exchange.. then it is a conflict to be management of the SLEC
[19:26] Kaddan Yue: i disagree
[19:27] Cadence Juran: thats a direct conflict of interst
[19:27] Aldon Huffhines: May I make a few observations?
[19:27] Kaddan Yue: have been sitting at the table for a bit
[19:27] TraderJohn Susa: 1 sec Aldon, please
[19:27] Aldon Huffhines: I am a small investor... I am here more as a blogger... I do not consider myself part of SLEC....
[19:27] Cadence Juran: the SLEC should be a regualtory body
[19:27] Mike31 Dawes: From ace's standpoint it should not want it's members on the board. simply for reasons that others cannot contend favortism
[19:27] Cadence Juran: with no perceived conflicts
[19:28] Mike31 Dawes: percieved is the key word to all this
[19:28] Cadence Juran: indeed
[19:28] Cadence Juran: Mike
[19:28] Kaddan Yue: but then you are staying I don't know how to think to protect my investment
[19:28] Kaddan Yue: and I should not be allowed to
[19:28] Kaddan Yue: come on
[19:28] Cadence Juran: but its not just about you Kaddan
[19:29] IntLibber Brautigan: Cadence, by that measure, shouldn't CEOs also not be on the board?
[19:29] IntLibber Brautigan: thats a conflict too
[19:29] Mike31 Dawes: actually quite the opposite. i'm saying that people may feel you work to hard to protect your investment over their's
[19:29] Cadence Juran: we are speaking of the SLEC
[19:29] Cadence Juran: lets stick with the tyopic
[19:29] Marc Attenborough: CEO's dont control markets
[19:29] Kaddan Yue: Yes and I am
[19:29] IntLibber Brautigan: that is the topic
[19:30] IntLibber Brautigan: CEOs are also regulated by the SLEC
[19:30] Cadence Juran: the topic is how to eleminate the conflict of interest at the SLEC
[19:30] Mike31 Dawes: I have woundered if CEO's should be excluded as well. Hence I have not offered myself
[19:30] IntLibber Brautigan: therefore its a conflict for them to sit on the board
[19:30] IntLibber Brautigan: the fact is that politics is about reaching compromise between all the conflicts of interest
[19:30] TraderJohn Susa: OK, one thing you must remember is that an exchange has a feduciary duty to its investors
[19:31] TraderJohn Susa: to protect their interests
[19:31] Mike31 Dawes: although CEO"s play a lesser role in dictating the rules in which an exchange opperates
[19:31] TraderJohn Susa: frankly, putting myself in a exchanges shoes....
[19:31] Marc Attenborough: 5 CEO's cannot manipulate the other 100
[19:31] TraderJohn Susa: I would feel very uncomfortable with no say
[19:31] Mike31 Dawes: correct Marc
[19:31] Travis Ristow: AMEN Marc
[19:31] TraderJohn Susa: an exchange gets ! vote
[19:32] Cadence Juran: the exchange should be a member
[19:32] Cadence Juran: the SLEC is a regualtory body
[19:32] Cadence Juran: and we have already SEEN what kind of influence has been applied
[19:32] Cadence Juran: by a manager of an echange
[19:32] Marc Attenborough: yes, the exchange should be a member, i agree
[19:32] TraderJohn Susa: they are out weighed by the other members
[19:32] Cadence Juran: still
[19:32] Cadence Juran: the echange shoudl be a member
[19:32] Cadence Juran: MANAGEMENT
[19:32] Cadence Juran: of the SLEC
[19:32] Mike31 Dawes: It would kinda like having a judge also be The DA in a legal case
[19:33] Cadence Juran: shoud be objective and impartial members of the community
[19:33] Cadence Juran: particualry business leaders of the SL community
[19:33] Kaddan Yue: I feel that is unfair after one was voted in by the public
[19:33] Cadence Juran: with NO ties to the exchanfges
[19:33] Marc Attenborough: if you eliminate the CEOs and the exchnages than you will never get buy-in from them
[19:33] Aldon Huffhines: I disagree Marc.
[19:33] Kaddan Yue: I will disagree a exchange does not make me who I am
[19:34] Travis Ristow: So you would like to see no CEO's involved then Cadence?
[19:34] Connie McMahon: Depends how it is doine.
[19:34] Cocky Dagger accepted your inventory offer.
[19:34] Connie McMahon: And if the exchanges decide its an advantage or not.
[19:34] Cadence Juran: I said business leaders
[19:34] TraderJohn Susa: Aldon, you've been patient
[19:34] Cadence Juran: a business leader doesnt have to be an CEO
[19:34] TraderJohn Susa: go on, then Mephist
[19:34] Mike31 Dawes: Kaddan the public view will always be that you would not vote against the wishes of ACE
[19:34] Aldon Huffhines: As it stands right now, SLEC has no power to enforce anything...
[19:34] Mephistopheles Thalheimer: Let me start with a brief summary
[19:35] Aldon Huffhines: I think we've already seen some of the issues that this causes...
[19:35] Cadence Juran: indeed
[19:35] Aldon Huffhines: Instead we get bickering between exchange heads....
[19:35] Aldon Huffhines: To have more power, the SLEC most influence a wider set of investorts...
[19:35] Marc Attenborough: That is corect Aldon, which is why Buy-in from the exchanges and from corporations is crucial to the SLEC's success.
[19:35] Aldon Huffhines: Regular day to day investors, not the big players...
[19:36] Aldon Huffhines: However, Marc, SLEC currently has no credibility with investors, at least as I can see...
[19:36] Mike31 Dawes: if the investors control the SLEC then it regulates the exchanges
[19:36] Aldon Huffhines: So, investors will look at it, shrug at best, more likely just chuckle and walk away.
[19:37] Aldon Huffhines: So, you need to get more influence of regular investors and less influence of the heads of either companies or exchanges...
[19:37] Aldon Huffhines: IMHO
[19:37] Cadence Juran: i have to say, you must widen your scope
[19:37] TraderJohn Susa: :-) you made a good point, the SLEC has no power. Our members do. Our power only comes when YOU are willing to back us
[19:37] Cadence Juran: to beyond investord
[19:37] Cadence Juran: s
[19:37] Aldon Huffhines: Which is why I think TJ started off the meeting so well...
[19:37] Cadence Juran: in order for the SLEC to be effective yo uNEED the cvommunity
[19:37] Cadence Juran: meaning
[19:37] Mike31 Dawes: investors won't give backing if they feel the SLEC is controled bythe exchanges
[19:37] Aldon Huffhines: We need to focus on what SLEC stands for... That will unite a community behind it.
[19:37] Aldon Huffhines: So far, I still have no idea what SLEC stands for or why I should care.
[19:38] Cadence Juran: you HAVE to reach outside the current demographics..
[19:38] Cadence Juran: thats why I recommend the business leaders of the community
[19:38] Marc Attenborough: Well, investors get nothing if the exchanges tell the SLEC to jump off a bridge.
[19:38] Cadence Juran: and you do not have to be a CEO
[19:38] Aldon Huffhines: And, as such, I will invest however I please and listening to one exchange head rant about some other exchange head isn't going to affect my investing...
[19:38] Cadence Juran: to be considered a buisness leader
[19:38] Aldon Huffhines: Other than view both exhcanges with much more suspicion
[19:38] Mike31 Dawes: the investors can tell the exchanges the same thing
[19:38] TraderJohn Susa: Yes mike we can
[19:39] Marc Attenborough: yes, the public votes with their wallet
[19:39] Travis Ristow: Right but say I was a business leader Cadence & I want to be involved. I am on 3 seperate exchanges though this is my point. You state no ties to the exchange then where would that leave a person like me?
[19:40] Cadence Juran: no thats not waht i meant
[19:40] Cadence Juran: i stated..
[19:40] Cadence Juran: that its a conflict to be management for an exchange
[19:40] Cadence Juran: and maangemtn at the SLEC
[19:40] TraderJohn Susa: Mephistopheles, you have been very atient, TY
[19:40] TraderJohn Susa: please make you statement
[19:40] Tatey Bonetto: Yes Marc, that is what I was getting ready to say....We as investors can have power by voting with our money...I think that IS our power and may be the only power we will ever have to regulate
[19:41] Mike31 Dawes: I simply stated. at least my position. multiple companies with many more to follow. i would not want myself to have any appearance of setting the regulations.
[19:41] Cadence Juran: Hey fellas can we let Mephistopheles speak :)
[19:41] IntLibber Brautigan: lol
[19:42] Mephistopheles Thalheimer: I shall start with a summary
[19:42] Mephistopheles Thalheimer: which you all know
[19:42] Mephistopheles Thalheimer: Approximtely three weeks ago the SLEC issued a recommendation with respect to the WSE & Midas bank. The final paragraph of the recommendation as given was:
[19:42] Mephistopheles Thalheimer: "As such, should Luke refuse to pay the dividend, it is the duty of all investors and listed companies to divest from HCL and delist their companies from WSE. Companies that refuse to delist from WSE should likewise be divested from by the investing public. Listed Companies have 1 week from the 48 hour deadline to complete a delisting and relisting upon another exchange."
[19:42] Mephistopheles Thalheimer: This statement issued by the SLEC was met with ENTIRELY PREDICTABLE statements by Luke of clash of interests etc... and the fact that these statements by Luke had a possible grain of truth was enough to make the rebuttals to some degree effective. It blurred the conflict.
[19:43] Mephistopheles Thalheimer: So, there are two immediate concerns/criticisms...
[19:43] Mephistopheles Thalheimer: 1. how will the SLEC address this clear and present danger of credibility?
[19:43] Mephistopheles Thalheimer: 2. how will the SLEC change it's decision making process to better analyse it's released statements so as not to discredit itself.
[19:44] Mephistopheles Thalheimer: Clearly the SLEC must weight the interests of the entire investing community including exchanges. Exchanges need to give input because they know the peculiar circumstances associated with running echanges. SImilarly with CEO's.
[19:44] IntLibber Brautigan: Can I respond? I promise I'll stay to the point
[19:44] Mephistopheles Thalheimer: Remember, Exchanges and CEOs, via their companies, are the wealth builders of an economy.
[19:44] Mephistopheles Thalheimer: Let me summarize with 2 recommendations..
[19:44] TraderJohn Susa: go on Int
[19:44] Mephistopheles Thalheimer: then questions/comments Int
[19:45] IntLibber Brautigan: ok
[19:45] Mephistopheles Thalheimer: 1. The SLEC license exchanges as members. Exchanges that maintain compliance with SLEC regulations and recommendations will stay licensed. Exchanges may leave at any time. SLEC maintains a gazette.
[19:45] Mephistopheles Thalheimer: 2. Exchange members of the SLEC be given a special class of representation, advisory but not regulatory.
[19:46] TraderJohn Susa: TY, very insitefu
[19:46] TraderJohn Susa: Frankly you have made a very good point
[19:47] TraderJohn Susa: as to your first point
[19:47] TraderJohn Susa: I'd have to say that censure is not something to be taken lightle
[19:48] TraderJohn Susa: lightly*
[19:48] TraderJohn Susa: there needs to be a better defined mech than "hey, see what he did?"
[19:49] TraderJohn Susa: and again, this is the dialouge we need
[19:49] TraderJohn Susa: the imput that makes this YOUR SLEC
[19:49] TraderJohn Susa: and through that, will enjoy you real support
[19:50] TraderJohn Susa: as for now I believe a reccomendation to the Board to take that up for immediate action
[19:50] TraderJohn Susa: see, I'm pretty cynical
[19:51] TraderJohn Susa: I get nervous when people start talking exclusion
[19:51] TraderJohn Susa: who makes those decisions?
[19:51] Mephistopheles Thalheimer: the rules
[19:52] TraderJohn Susa: Ah yes, rules.
[19:52] TraderJohn Susa: They don't magically appear, you know
[19:52] TraderJohn Susa: PEOPLE with agendas make the rules
[19:52] TraderJohn Susa: and people are human
[19:53] TraderJohn Susa: rules are dangerous things that are to be made with caution
[19:53] TraderJohn Susa: because every rule can be subverted
[19:53] TraderJohn Susa: so the ones that exclude?
[19:53] TraderJohn Susa: those are the most dangerous of all
[19:54] Mephistopheles Thalheimer: there is nothing wrong with evolving rules based on events.. I suggest the SLEC took a hit here. Perhaps a rule: When voting on a censure motion to an existing unlicensed exchnage, exchange members are recused from voting.
[19:54] TraderJohn Susa: because it's to easy to exclude your oppision
[19:55] TraderJohn Susa: There is EVERYTHING wrong with rules being evolved from the heat of an event
[19:56] TraderJohn Susa: rules are to be involked because they make sense, not to sooth the media
[19:56] Mephistopheles Thalheimer: well, I mean now.. after the event and response from the previous action. A quality control mechanism
[19:56] TraderJohn Susa: that said, I agree you suggestion should be taken up with the board
[19:56] TraderJohn Susa: I am not the SLEC after all
[19:57] Mike31 Dawes: sometimes an unforseen thing pops up that makes someting come to light. something has to be doe to prevent future occurances
[19:57] TraderJohn Susa: sometimes that is true, Mike....
[19:58] TraderJohn Susa: but most times history shos it's just a knee jerk to the momentary public whim
[19:58] Mike31 Dawes: this is more an internal rule than external one.
[19:58] TraderJohn Susa: all I am saying is consider HARD b4 making a rule you have to lve with
[19:59] IntLibber Brautigan: Well I would like to apologize to EVERYONE for being the one who put out the SLEC notice on the WSE ruling. I was the wrong person to make that statement, and left the SLEC open to attack because of that. All I can say is that TJ and Fiona had both been absent for weeks without word and Pat and I had been struggling to keep things together. Pat asked me to put it out, and I did. I'm sorry about that.
[19:59] Cadence Juran: TJ who i son the SLEC Board?
[20:00] TraderJohn Susa: TY, Int. I appreciate that
[20:00] Cadence Juran: or who has voting rights should be my question
[20:00] TraderJohn Susa: The elected board has voying rights....
[20:00] Mike31 Dawes: I believe in a system of checks and balances. A senator cannot also be president. I feel the exchanges duty it to regulate it's CEO's the SLEC is to regulate the exchanges and possible disputes between exchanges and CEO's. Now when the SLEC makes a decisive move against one exchange will a competing exchange has a director on the SLEC board the favortism or conflict card can be used to defend itself. that is counter productive.
[20:01] Cadence Juran: and who currently sits on the board of the SLEC?
[20:02] TraderJohn Susa: TY, I am double checking my list - fact is due to health and a few other reasone I have been out most of the last two months....
[20:02] IntLibber Brautigan: I can tell you
[20:02] You: TJ Sousa - President Patrickj Ah - VP BaliusCaleb Ashley – Tmp S/T Fiona Szondi – Exec Director Intlibber Brautigan - Replaced by Kaddan Yue on 11/19/07 Cocky Dagger – ISE Bogart Beck – SLCAPEX added 9/24 New Directors just elected Kadden Yue – ACE - added 11/19 Travis Ristow – Public – added 11/19 Skyranger Hammerer – Public – added 11/19 Chester Capalini – Public – added 11/19
[20:03] TraderJohn Susa: one of the reasone I took responsibility for everything that has happened since that time....
[20:03] TraderJohn Susa: I dropped the ball, Cadence.... hence the confidence Vote
[20:03] IntLibber Brautigan: correction
[20:03] IntLibber Brautigan: Fiona
[20:03] You: Yes?
[20:03] IntLibber Brautigan: You have kaddan twice
[20:03] Cadence Juran: OK.. let's take a closer look at your board
[20:04] Cadence Juran: and lets identify those conflicts of interests
[20:04] TraderJohn Susa: No Cadence, it's our board or you have no business being here
[20:04] TraderJohn Susa: the SLEC is the members.
[20:04] Cadence Juran: isnt that the point of all of us being here
[20:04] Cadence Juran: to talk about the SLEC
[20:04] Cadence Juran: and HOW to fix it
[20:04] Cadence Juran: ?
[20:04] Mike31 Dawes: It may also be appropriate to setup a system in which in case of a extended absence duties or powers are moved to the next person until that absense can be resolved
[20:05] TraderJohn Susa: That it's MY board, no
[20:05] Cadence Juran: and YOUR board is the board of the SLEC correct?
[20:05] TraderJohn Susa: THat was in play, Mike
[20:05] Mike31 Dawes: ;-)
[20:05] TraderJohn Susa: No Cadence - I appointed 1 person
[20:06] You: I believe the point being missed is that the board is the SLEC's not TJs.
[20:06] TraderJohn Susa: that is sitting on the board
[20:06] TraderJohn Susa: the members elected the majority
[20:06] TraderJohn Susa: Your point though?
[20:07] Cadence Juran: ok.. i'm tired of beatng a dead horse... here;s some free advice.. if you want the SLEC to be effective.. then place poeple on the management and board that do not have perceived conflicts of interests.. AND who do do not compromise the integrity or image of the SLEC
[20:07] Cadence Juran: otherwise the SLEC will remain ineffective
[20:07] Cadence Juran: and you will not have the support of the majority
[20:08] TraderJohn Susa: :-) why Cadence you sweet talker.... you are right, however I do not place people - I have 1 vote just like yopu
[20:08] Cadence Juran: start over
[20:08] TraderJohn Susa: really, why?
[20:08] Cadence Juran: wash it all away and start over with the community
[20:09] TraderJohn Susa: How will that serve the members?
[20:09] Cadence Juran: it will serve the community
[20:09] IntLibber Brautigan: define the community
[20:09] Cadence Juran: and it may even win back many that left
[20:09] TraderJohn Susa: It's easy to say and makes a good sound byte but why?
[20:09] IntLibber Brautigan: SLEC membership has never been higher
[20:09] Cadence Juran: i also recommend that you expand your demogrpahics
[20:10] Cadence Juran: form just investors
[20:10] IntLibber Brautigan: anybody can join SLEC
[20:10] IntLibber Brautigan: there are no admissions limits
[20:10] Cadence Juran: reach out to the entire SL community
[20:10] Aldon Huffhines: How many members are there in SLEC? How do you become a member? What are the rules for joining, for voting? When are votes for board members? ( I know it is a lot of questions, but I still wonder if SLEC is at all relevant, and how its membership relates to the investing public)
[20:10] Cadence Juran: there are soooo many great business leaders
[20:10] Cadence Juran: put your PR and marketing teams to work
[20:10] Cadence Juran: grassroots approach
[20:10] Cadence Juran: talk to business owners
[20:11] Cadence Juran: outside the financial/investment sector
[20:11] Mike31 Dawes: to be quite frank most investors are oblivious to the SLEC at this point
[20:11] You: 245 members.
[20:11] Aldon Huffhines: Thank you Fiona
[20:11] TraderJohn Susa: Cadence - a lot of info but WHY?
[20:12] TraderJohn Susa: WHAT BENEFIT?
[20:12] Cadence Juran: to see a standard established
[20:12] IntLibber Brautigan: if your not an investor whats the point of joining the group?
[20:12] Cadence Juran: but a standard that is built upon objectivity
[20:12] IntLibber Brautigan: people only get 25 groups in SL
[20:12] TraderJohn Susa: hat the standard of slash and burn?
[20:13] TraderJohn Susa: I am asking a simple question
[20:13] Aldon Huffhines: ISE, which I believe is the smallest of the exchanges has 1521 members... So, the 245 members of SLEC represent at best 16% of ISE, and I suspect by extention a much smaller percentage of the trading public in SL
[20:13] TraderJohn Susa: You said to whipe the board clean and start over - aside for a good sound byte WHY
[20:13] Cadence Juran: why?
[20:13] Cadence Juran: very simple
[20:13] TraderJohn Susa: What service will that do for the members?
[20:14] IntLibber Brautigan: People have memberships in groups they are interested in, you can't make people join, so what is the interest to a person who has no investments in SL to be an SLEC member?
[20:14] Kaddan Yue: Question
[20:14] Cadence Juran: to show the community that you are serious about repairing the damaged image of the SLEC and to dissolve all internal conflicts of interests
[20:14] Kaddan Yue: have we solved anything yet
[20:14] Travis Ristow: question also
[20:14] IntLibber Brautigan: how does that accomplish that?
[20:14] Cadence Juran: look the bottom line is the SLEC has lost support
[20:15] Cadence Juran: so how do you go about gainaing that support back
[20:15] Cadence Juran: thats the question y9ou all shoudl be asking yourselves
[20:15] TraderJohn Susa: and the answer is right here
[20:15] Travis Ristow: In My opinion Not by wiping everything out and asking newbies to get involved - the fact is many of them have NO clue about what happens with financial markets
[20:16] Cadence Juran: its called COMMUNITY OUTREACH
[20:16] Cadence Juran: you cant just hold a meeting and excpect people to come to you
[20:16] IntLibber Brautigan: which community Cadence?
[20:16] Travis Ristow: The you have arbitrary requests
[20:16] Cadence Juran: you have to go to the community
[20:16] IntLibber Brautigan: you haven't stated what community has the interest
[20:16] TraderJohn Susa: lol - that is no served by starting over
[20:16] TraderJohn Susa: sorry but I disagree - just my opinion
[20:16] IntLibber Brautigan: so please make a valid point somehwere
[20:16] Cadence Juran: look I'm not the one here doing dsmage control
[20:16] Mike31 Dawes: we don't need the general commmunity. we need to develop relationships with the investment community
[20:17] Cadence Juran: i'm only making recommendations
[20:17] Cadence Juran: and yes they are extreme
[20:17] Cadence Juran: but quite franky the SLEC is at that point
[20:17] IntLibber Brautigan: recommendations should have a purpose and be expected to produce results
[20:17] Cadence Juran: your support has eroded away
[20:17] Travis Ristow: Not completely Cadence
[20:17] TraderJohn Susa: Yes it has.
[20:18] TraderJohn Susa: and for good reason - we dropped the ball.
[20:18] Travis Ristow: Many of us still believe that with reform we can regain
[20:18] Cadence Juran: out of all the exchanges who's left other than ACE?
[20:18] SexyJade Echegaray is Online
[20:18] Travis Ristow: what we had and grow
[20:18] TraderJohn Susa: wiping it all clean as you suggest does not make it better it makes it worse
[20:19] Tatey Bonetto: Well, as just a lowly investor, I feel alienated from the SLEC and just don't see the point....It has turned into just another forum for exchanges and CEO's to stick their claws into each other
[20:19] Tatey Bonetto: Just my two cents
[20:19] SexyJade Echegaray is Offline
[20:19] Cadence Juran: I'll repeat my question... out of all the exchanges who is left other than the ACE?
[20:19] Aldon Huffhines: Exactly! Tatey
[20:19] TraderJohn Susa: Your two cents are valued, TY
[20:19] Tatey Bonetto: Thanks
[20:19] TraderJohn Susa: You really don't know Cadence?
[20:20] Cadence Juran: please dont asnwer my question with a question
[20:20] IntLibber Brautigan: lol
[20:20] TraderJohn Susa: Then just make you point without the theatrics
[20:20] TraderJohn Susa: Please, that is
[20:20] Cadence Juran: does the public here and now at this meeting currently know how many exchanges support the SLEC?
[20:21] Cadence Juran: thats a fair question
[20:21] Cadence Juran: please lets not start getting defensive :)
[20:21] Connie McMahon: I think her point is that 94% of the listed companies and 95% of the share volume is now on non-SLEC affiliated exchanges.
[20:21] Connie McMahon: Seems like starting over isn't much different.
[20:21] IntLibber Brautigan: wrong
[20:22] TraderJohn Susa: Cadence, not defensive just tired of games
[20:22] IntLibber Brautigan: 3 million shares a week is not 1 %
[20:22] IntLibber Brautigan: pr 6%
[20:22] Cadence Juran: there are no games.. just the hard cold facts
[20:22] IntLibber Brautigan: rhetorical questions are games
[20:23] Kaddan Yue: Question
[20:23] Kaddan Yue: wil there be a second open forum
[20:23] Kaddan Yue: because it will soon be 3 hrs of this
[20:23] TraderJohn Susa: Yes, I would like that - believe it or not....
[20:23] TraderJohn Susa: this is quite healthy
[20:24] TraderJohn Susa: Would you all like to continue this next week?
[20:25] TraderJohn Susa: ok then, Next week same time - optional
[20:25] TraderJohn Susa: Int I promised you time
[20:25] TraderJohn Susa: give me 1 more min please first
[20:25] TraderJohn Susa: I want to thank you all.
[20:26] TraderJohn Susa: and I mean that
[20:26] TraderJohn Susa: you particiated
[20:26] Cadence Juran: THank you TJ for hosting this meeting :)
[20:26] TraderJohn Susa: you showed fire and passion
[20:26] TraderJohn Susa: and show more than anything else that you care
[20:26] TraderJohn Susa: as I said up front....
[20:27] TraderJohn Susa: the SLEC is not what's important....
[20:27] TraderJohn Susa: what is is that passion for the Ideals we all believe in - and EVERY body deserves to be heard - even if I do disagree with them....
[20:27] TraderJohn Susa: especially then, in fact
[20:28] TraderJohn Susa: I will put the confidence vote out tonight or tomorrow
[20:28] TraderJohn Susa: and I'll leave it up to you all to decide.
[20:28] TraderJohn Susa: thank you and good night