I've been reading alot lately in the SL Finance-related Forums about a few folks who think that Derivatives and Put or Call Option Contracts are an appropriate mechanism to mitigate risk in the SL Capital Markets.

For those that are paying attention to any of the detail provided, such contracts are now being offered on at least two SL-based Stock Exchanges with almost ZERO Oversight and ZERO actuarial underwriting. To be very frank, such contracts expose the underwriters, the obligees and the purchasers to EXTREME RISK. DO NOT BE FOOLED by the fancy three dollar words being touted by the purported "Experts" in SL.

Until such time as there is a legitimate and enforceable regulatory framework for SL-Based Capital Investment such instruments in THIS WRITERS OPINION have ABSOLUTELY NO BUSINESS in the SL Capital Markets PERIOD.

PLEASE BE FOREWARNED: The PUT and CALL OPTIONS being offered in SL at this time will most certainly finish OUT OF THE MONEY at Contract Expiration. Do the math!

I've appended an article published just today by AP Writer Anne Flaherty. If it AIN'T workin' in the RW you can be damn sure it ain't gonna work in the unregulated world of SL Capital.

BO Out for now.

================================================================================

Treasury wants to clamp down on credit default swaps, other privately traded derivatives

http://news.yahoo.com/s/ap/20090513/ap_on_go_ca_st_pe/us_treasury_regulation

Anne Flaherty, Associated Press Writer
On Wednesday May 13, 2009, 4:48 pm EDT

WASHINGTON (AP) -- The Obama administration is asking Congress to extend its oversight of the financial system to include the shadowy market of derivatives, the kind of complex financial instruments that helped bring down the giant insurer AIG.

In a draft two-page letter to congressional leaders, the Treasury Department says it wants to create a central electronic-based system that would track the buying and selling of derivatives. It also wants to ensure that financial firms selling the instruments have enough capital on hand in case they default and subject them to stringent standards of conduct and new reporting requirements.

The legislative proposal, to be announced later Wednesday by Treasury Secretary Timothy Geithner, is the administration's first major step in overhauling the nation's financial regulatory system.

"All (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation," Treasury wrote in its draft letter.

"Key elements of that robust regulatory regime must include conservative capital requirements, business conduct standards, reporting requirements and conservative requirements relating to initial margins on counterparty credit exposures," the department adds.

Current law largely excludes regulation of instruments, which are referred to as "over-the-counter" derivatives because they are traded privately rather than through commodity exchanges now regulated by the Commodity Futures Trading Commission.

New rules would deter financial firms from taking undue risk, prevent fraud and ensure they are marketed appropriately, Geithner said in the draft letter.

Geithner said in congressional testimony last month that he wants to force these types of contracts to be cleared through a central system.

"Let me be clear: The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end," he said.

The value of over-the-counter derivatives hinges on an underlying figure or commodity -- ranging from currency rate swaps to oil futures and inflation bets. The derivative reduces the risk of loss from the underlying asset. The global business world holds a staggering $600 trillion of these contracts.

One of the most infamous examples of the derivatives were credit-default swaps sold by American International Group Inc. AIG sold the swaps to investors as a kind of insurance to protect against defaults on mortgage-backed securities. But the company had to accept a hefty federal bailout after it was unable to support the contracts.

Under Treasury's new plan, companies like AIG would have to prove they have enough reserve capital to support its sale of the derivatives.

Also under the plan, the CFTC would establish an "audit trail" for the derivatives and have "clear unimpeded authority to police fraud, market manipulation and other market abuses" involving the derivatives. The Securities Exchange Commission would be given comparable authority, including tools to prevent insider trading.

The new system should enable the regulators to "detect and deter all such market abuses," Geithner states.

The CFTC said in a statement that the plan would allow the organization to fulfill its core missions to protect the public from fraud and to "foster open, competitive, and financially sound futures and option markets."

Time once again for Bo's weekly rant...

I'm about to head off to Las Vegas for an industry trade show (NAB) and will be essentially out-of-touch from Sunday 04/19 through Thursday 04/23. I've been many times as it's part of my day job and it can often be a bit of a grind. I'm actually really looking forward to it this year although I'm sure attendance will be down significantly from previous years. I'm hoping a highpoint this year will be a presentation being delivered Tuesday AM by Linden Research, Inc. Chairman Philip Rosedale, who will be discussing virual worlds; how we use them today and how we'll use them in the future. Given the predominately media and broadcast oriented audience it should be a great dialogue. I'll report on my thoughts when I return.

From my perspective, the SL Finance Community has been in quite a funk recently - low volumes, limited liquidity, seething arguments on some forums and a few very thoughtful and articulate debates on others - I've been particularly encouraged by some of the dialogue on ISE recently centered around Corporate Governance, CEO succession strategies and the responsibbilities of outgoing Officers during transition. I was beginning to think that much of the dialogue would be wasted effort but was pleasantly surprised to awake this AM to a surprise announcement posted by my dear freind Samantha Goldflake.

In a Press Release dated April 15, 2009,  EVP Samantha Goldflake announced the appointment of SL veteran Konner McDonnell as Chief Strategy Officer (CSO) for VSTEX effective April 16, 2009. Mr. McDonnell will be responsible for Exchange Strategy Development and Execution.

"We are faced with numerous opportunities for growth and I asked Konner to come and assist me in driving strategic initiatives across the stock exchange," stated Samantha Goldflake, Executive Vice President and Chief Strategy Officer for Vstex Company. "Konner's experience and knowledge of this virtual finance sector are invaluable and he will be a key resource as we move forward. Now that I'm tasked to other markets where Vstex Company operates, Konner is the due answer to the need of improving the VSTEX standing amongst its competitors. "  

From a community standpoint I think this is actually very good news. While Konner and I have had some heated differences of opinion both publicly and privately, I personally can think of no better person to assist VSTEX at this point in its history. In my experience, Mr. McDonnell has demonstrated a keen ability to get to the heart of shareholder issues and has a knack for distilling sometimes complex legal opinions into a lay persons vernacular.

As the community at large continues to wrestle with toics ranging from quasi-regulatory oversite, Exchange policy, and the broader issue of SL "Public-Company" governance I suspect that Konner will have a very strong voice and firm yet gentle hand in helping guide the community in the right direction. My personal kudo's to Samantha and Tobia on a fine catch and congrat's to Konner on the appointment - you've earned the opportunity without question!

In other personnel news today, JayT Axel has announced  that Firstdesigns Milos has resigned his position as Chief Financial Officer of Express Shopping Network (ACE: ESN). Rumor has it that Cousin Milos has designs on a broader opportunity within the community - we'll keep our eyes peeled in that regard!

Got your own tip, tidbit or titillating news story? Drop me a line - This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   and I'll get me reporters cap dusted pronto. 

Bo out for now - Cheers!

SL Reports.net - (SLR) - An Introductory Message from Bo

Friday, April 03, 2009 - " ...and we're back." For those of us that rely on GMail it's a frequently encountered postscript to some operational or technical mishap within Googles infrastructure. While usually short-lived, such inconveniences typically occur at the most inopportune times, whether that's in the middle of a chat session with a client or freind, or mid-sentence in message composition. This week I've received several messages from SL freinds and associates questioning the rationale for the reorganization of SL Reports.net (SL CapEx: SLR) and my appointment as its Chairman and Chief Executive particularly given the significant conditions attached to such appointment. From afar it might appear that SLCapEx.com has just encountered a substantial mis-step of its own.

"Bo... hundreds of people rely on CapEx and this announcement could not have come at a more critical time... have you people lost your minds?" Actually dear freinds, no - we believe honestly that this latest broad brushstroke is a timely and quite necessary event in our community's evolution. It's my hope that the context provided herein will put folks at ease and help readers here recognize the strategic importance of SL Reports.net to our community at large.

During my tenure as CEO of SL CapEx, (almost two years for those keeping score), most of us have relied on a handful of trusted sources for news and information regarding potential opportunities within the SL Finance Community. The majority of SL Investors have perhaps a precious few hours each week to explore and investigate the entrepreneurs and businesses that comprise our markets. Reliable and unbiased news reporting is a foundational cornerstone to any community, including SL. Over the last several months, as Scott, Chan, Cash and I talked about the challenges of CapEx, I found that a large percentage of our dialogue was centered around issues and observations that had less to do with CapEx itself than with the perception of our "industry" as a whole, its participants, our wild and wacky history and the whole host of characters that have been part of it.

Contrary to the belief of a few, operationally CapEx is in better shape now than it has ever been - its Balance Sheet is clean and debt free, its member companies and their executives are mostly stable and reliable, the codebase is secure and trustworthy and the leadership team clearly understands its role and responsibilities to both investors and the member companies it serves. Sure, CapEx could be more profitable (so could a lot of companies) and I take leave with a few loose ends still dangling - foremost the CapEx Policy re-write (which I've committed to helping finish as quickly as possible of my own accord).

In reality I'm not actually falling far from the tree - as a Board Member I will still make myself available to CapEx and its leadership for any strategic dialogue and technical things like merger backend processing, and, I will still participate in the IPO Application Review process as it has always been a BOD-level obligation. The biggest change from a CapEx standpoint is that my often outspoken opinions will not be the lightningrod focalpoint of CapEx's existance - that's probably a good thing in the long run.

For SL Reports.net, going forward my mission will be to return SLR to the respected prominence it once held within our community. Its objective shall be nothing less than to again be the single, authoritative source for news and views regarding all things SL Finance-related, and ONLY SL Finance-related.

A TALL ORDER INDEED - we'll not portend to be a social networking site, or a rag for fashionista's or some freindly coffee klatch human interest blog - there are plenty of others that do that quite well - it's just NOT OUR NICHE.

For SLR to re-earn the respect of its readers, the content must be compelling, focused and timely. Its NEWS must be diligent, investigative, objective and unbiased, and any Editorial or Opinion pieces must be presented in a balanced and professional manner. I make that commitment - not just to CapEx and its membership but to the entire Community including ACE, ISE, VSTEX and the SL private sector.

SL Business News - That's our job - plain and simple. News begets Readers. Readers begets Advertisers. Advertisers begets Revenue, Revenue begets Income. Income begets Profit. Profits begets Dividends - good ol' Capitalism at its finest.

Over the next few days I will put together a comprehensive Business Plan for SLR Shareholders including a revenue plan, a revised advertising rate sheet and a timeline for profitability. In the interim stay tuned HERE for NEWS and VIEWS. Send your tips and tidbits to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

...and we're back!

Bogart Beck
SLR Chief

SL CapEx System Announcement REPRINT - http://www.slcapex.com/home/story/system/2323
by Scott Nestler

SL Reports (CapEx: SLR)

Date: Tuesday, March 31, 2009
From: Scott Nestler, Chairman, SL CapEx
To: All Interested parties,

In re; Moving forward...

For quite some time the BOD of SL CapEx (Bo, Chan, Cash and I) have been contemplating the state of our Union, our community, and our collective investments across the grid. As many here recognize the combined holdings of Bogart and myself are quite substantial and it's created an unlevel playing field in the marketplace with entirely too much authority concentrated in the hands of far too few.

Concurrent with that issue we find ourselves constantly wrestling with difficult issues regarding Exchange policy and enforcement, and the ongoing challenge of growing, reshaping and maturing as a community. Today we find ourselves at an interesting crossroad; it seems most of the SL Exchanges have settled in for the long haul and have found their own place, features and philosophies for operation. On SL CapEx, the majority of companies now take themselves seriously, and our member CEO's are diligent, responsive and cognizant of their Shareholder obligations. For the most part that credit belongs to Bogart Beck and Cash Yiyuan - I think most people here recognize the incredible effort and fortitude they have demonstrated during what can only be described as a time of unprecedented challenges.

As we move forward to the next chapter of our existence, I believe it is time to make some substantial changes to our organization, our policies and some of our investment strategies. I recognize that a few of these changes may be unpopular, somewhat controversial and perhaps may even appear arbitrary, nonetheless together I believe they are the right decisions, at the right time, for the right reasons. I have discussed them with my team individually and we each agree under the unique circumstances before us that they are proper, timely and necessary. I hope the majority of you will agree.

Effective April 01, 2009, I have asked Bogart Beck to assume the role of Chairman and CEO of SL Reports (CapEx: SLR). Since SL CapEx's inception SL Reports has been the single most authoritative voice for our community. SLR is the oldest surviving entity on SL CapEx and its mission and purpose must not be compromised. During his tenure as CEO of CapEx Bogart has demonstrated unequalled knowledge of our community, a unique, articulate (and sometimes obnoxious!) ability to get to the point and very strong opinions about most everything that's transpired in the SL Finance Community over the last two years. I can think of no better person to take the helm of SLR, however, to be an effective and unbiased News Source I've asked Bo to do several things;

1 - Effective April 01, 2009, Bogart Beck will resign his position as CEO and interim CFO of SL CapEx. Bo will REMAIN as an independent Boardmember of SL CapEx.

2 - Effective April 01, 2009, Bogart Beck will resign his Board of Director positions in Hi-Five (HIFI), Milos Designs (MLS), Nestler Investment Corp (NIC) and Virtual Payment Systems, Inc. (VPAY).

3 - Concurrent with the consolidation, the SL CapEx Investment Portfolios currently managed by Beck Investment Group will be moved to the SL CapEx ALT (CapExATM Aquila) and be managed by Chan, Cash or myself.

4 - I will begin recruiting for talent to help offset the loss of Bo immediately. In the interim, Cash, Chan and I will share joint responsibility for the day-to-day operations of SL CapEx. Interested? Drop me an Email ASAP!

5 - As compensation for his services to SLR, I am granting 1M unrestricted SLR shares to Bo as an individual, and am also returning 1.5M of the SLR shares held by VPAY to SLR's Treasury to give it a firm foundation.

6 - The remaining 1.83M shares of SLR held by VPAY will be retained longterm as a strategic investment. I have asked Cash Yiyuan to join me on the BOD of SLR to help provide Bo with strategic guidance going forward.

It should be painfully obvious that the principals of SL CapEx and VPAY have not taken this decision lightly, and, I am confident we've made the right decision in this matter on behalf of the entire community. As such, please join me and supporting Bo though this transition - it's a huge step forward for all of us!

Please contact me in world or by email ( This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ) if I you have any questions regarding this announcement.

Kind regards,

Scott Nestler,
Chairman, SL CapEx