By Guardian Market, SLR CFO

I cannot predict the future.   All that I can do is look at the past, and attempt to draw lessons from what has happened before, and hope that others can do the same.  That being said, the current situation with JT Financial and SL Wallet (SLW) is reminiscent of what happened with Ginko Financial a few months ago.

Let’s review the facts similarities.  With both institutions:

• Linden Labs took a new policy action that caused a large run on deposits.
• The institutions became at best illiquid and at worst insolvent.
• The institutions decided to convert their existing deposits to equity compulsorily.
• Depositors have been promised that their new equity will be purchased back at cost over time.

For those of you who have been reading SL Reports for awhile, you know that I was not a fan of Luke Connell’s decision to prohibit Nicholas Portocarrero from purchasing Ginko Perpetual Bonds (GPB) at less than L$1 per share if investors were offering them at such prices.  I wrote about it in an article called “Salt in the Wound: WSE Price Regulation of GPB. ”  However, this time around I highly doubt that Arbitrage Wise will prohibit himself from buying back SLW shares at less than L$1 per share.  Thus we have a rare gift in the financial markets, the opportunity to see how nearly the same event is handled with a minute difference in the rules of engagement.

By Xavier Mohr, SLReports.net

An Editorial

In a stunning nine-point post yesterday, L&L Bank and Trust (CapEx: LNL) CEO Lindsay Druart announced ambitious expansion plans that include the opening of a stock brokerage and global exchange at the bank's website, myllbt.com.

"The brokerage division is now L&L Bank and Trust Brokerage Exchange," said Druart. "Investors will openly trade LLBT’s portfolio on our enhanced website... this will be one stop shopping for all investment needs."

Druart says that companies not currently in the portfolio may be bid upon by investors through their enhanced trading system, at which point shares will be purchased by LNL from the applicable exchanges. Dividends will be paid to investor's accounts in the same way they would be at the respective exchanges.

An interesting twist to LNL's brokerage idea is a vague mention of "specifically-targeted funds and indices" that will be created to trade at the bank's website. An interesting note of this nature also appeared in an announcement from L&L Credit Reporting Agency and Business Services (CapEx: LCA).

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.