Content deleted Content added
ClueBot NG (talk | contribs) m Reverting possible vandalism by 76.218.99.61 to version by Pinethicket. False positive? Report it. Thanks, ClueBot NG. (1116313) (Bot) |
m "an user" to "a user" (via WP:JWB) |
||
(29 intermediate revisions by 17 users not shown) | |||
Line 1:
{{refimprove|date=April 2021}}
<!-- Deleted image removed: [[Image:Stockgen.jpg|thumb|An image of the site]] -->
'''Stock Generation''' ('''SG''') was a
==History==
The website was established in January 1998 and was run from [[Dominica]]
The SEC then sued in the [[U.S. District Court for the District of Massachusetts]], alleging that the "virtual stock exchange" was in effect a [[Ponzi scheme]]
==Operation==
Companies 1 to 8 were traded for purely "gambling" purposes, as their shares could go up and down randomly. Having those 8 companies "trading" on their website
Company 9, named Golden Nuggets, was the "privileged" company, with its shares "guaranteed" never to decrease in value. Promised return was originally 10% a month (215% annually
Companies 10 and 11, named MegaByte and The Fountain of Youth respectively, promised monthly returns of 50% and 100% (later 40% and 70%) respectively. At the same time, share prices could plummet 50% for company 10 and 100% (e.g. all the way down to 0) for company 11. That caveat
Stock Generation was reluctant to
Rule 13 allowed
The devaluation clause in Rule
Stock Generation continued to operate for several weeks after that, offering returns of up to 150% a month, but further legal troubles led to their website being halted by June 1, 2000.
==Legal
The description below is a quotation of the public information from the [[United States Court of Appeals for the First Circuit]], as decided in ''SEC v. SG, Ltd et al., 265 F.3d 42 (1st Circuit 2001)'':<ref name="1stcircuit">[
<blockquote>
"StockGeneration" website offering on-line denizens an opportunity to purchase shares in eleven different "virtual companies" listed on the website's "virtual stock exchange." SG arbitrarily set the purchase and sale prices of each of these imaginary companies in biweekly "rounds," and guaranteed that investors could buy or sell any quantity of shares at posted prices. SG placed no upper limit on the amount of funds that an investor could squirrel away in its virtual offerings.
The SEC's complaint focused on shares in a particular virtual enterprise referred to by SG as the "privileged company
While SG conceded that a decline in the share price was theoretically possible, it assured prospective participants that "under the rules governing the fall in prices, [the share price for the privileged company] cannot fall by more than 5% in a round." To bolster this claim, it vouchsafed that shares in the privileged company were supported by several distinct revenue streams. According to SG's representations, capital inflow from new participants provided liquidity for existing participants who might choose to sell their virtual shareholdings. As a backstop, SG pledged to allocate an indeterminate portion of the profits derived from its website operations to a special reserve fund designed to maintain the price of the privileged company's shares. SG asserted that these profits emanated from four sources: (1) the collection of a 1.5% commission on each transaction conducted on its virtual stock exchange; (2) the bid-ask spread on the virtual shares; (3) the "skillful manipulation" of the share prices of eight particular imaginary companies, not including the privileged company, listed on the virtual stock exchange; and (4) SG's right to sell shares of three other virtual companies (including the privileged company). As a further hedge against adversity, SG alluded to the availability of auxiliary stabilization funds which could be tapped to ensure the continued operation of its virtual stock exchange.
Line 35 ⟶ 36:
SG's website contained lists of purported "big winners," an Internet bulletin board featuring testimonials from supposedly satisfied participants, and descriptions of incentive programs that held out the prospect of rewards for such activities as the referral of new participants (e.g., SG's representation that it would pay "20, 25 or 30% of the referred player's highest of the first three payments") and the establishment of affiliate websites.
At least
</blockquote>
==Notes==
{{notelist}}
==References==
{{reflist}}
{{Scams and confidence tricks}}
[[Category:Internet fraud]]
|