From lindsaydruart.blogspot.com:

Sunday, January 13, 2008
Why L&L Corporation Has Severed Ties with WSE

On December 20, 2007, I was alerted by Luke Connell Vandeverre over a conversation in Skype that 3 Midas depositors had hired Stevan Lieberman of Greenberg and Lieberman, LLC claiming damages from the World Stock Exchange in response to its default on bond payments causing the supposed bankrupt. While I thought the lawsuit a bit frivolous in a business sense as it would cost more to facilitate than the actual benefit, I advised Luke to do what he felt best but to do a bit of research on the claims that the lawyer was making. Luke replied to the lawyer with a statement that he was not liable, as expected, and copied several Linden Lab officials. This was an expected reaction and perfectly fine by my view at the time.

In the notice as well as conversations with Luke, it was clear that the banking industry of SL was not his favorite sector nor was JT Financial and SL Capital Exchange as this was the topic of discussion on many occasions. In addition, there were several attempts to purchase L&L Bank and Trust, one initiated by myself during the time in which that was an option and several subsequent inquiries made to me as well as Luke Birdbrain. I found it odd but continued to conduct a bit of logical explanation for possible reasoning. Considering WSE closed VERY shortly before the banking ban without any prior notice, I was puzzled as Luke had shared information about WSE happenings before but this time was different. Once the banking ban initiated, Luke Connell was quite elated to the fall of the SL banking industry which I found very odd. At that point, it all made sense. Luke Connell was tipped off. I speculate that Linden Labs received a subpoena for account information in relation to the Midas depositor’s case. Per Luke Connell, the lawyer planned to pursue the case whether there was a loosing chance or not to get the public eye on virtual business and create his name in the press for it.

From an announcement at the International Stock Exchange:

In both RL & SL in order to make money-bank deposits are invested to make a profit to be returned to investor's via interest payments.  Therefore no bank-RL or SL has the funds on hand to allow 100% of all account holders funds to be withdrawn immediately.

Due to the fact that Linden Labs gave us no notice before making their policy public-many folks rushed the ATM's in a panic withdrawing millions & caused us to turn off the ATM's to allow fair distribution & consideration of our options. 

Needless to say-liquidating investments in a quick manor is nearly impossible.  Loans are out-some for up to a year and those folks aren't in the postion to repay their loan immediately-if they were they wouldn't have needed loans in the first place.  Investments in other SL financial entities have either been severely limited or halted due to the recent policy changes or even have dropped in value again due to this recent development. This new policy is already beginning to effect other SL entities and the total effect is still to be determined. We expect to see land prices fall and other things that will result in a true recession within SL. Making liquidation at a worthy value a slow process.

From an announcement at VSTEX.net:

First off, sorry if we post about this only now, but since the new inworld banking policy came out, we've been busy informing people both inworld and by email.

The VSTEX does not offer interests on deposited funds. We'e not a financial institution. We're trying to look through the smoke and see if the new policy will affect us or not.

I would like to stress out that at any given time we hold a 100% reserve on our ATMs and they will stay open with no withdrawal limits.