John Spence
Wanna Bet?
John Spence
Thursday, February 01, 2001
You see the craziest stuff coming over all these Internet wire services we have today, but this one is truly bizarre - mostly because it's a case of fantasy mimicking reality just a little too closely.
A story posted last night by Associated Press (AP) said that a federal judge dismissed a Securities and Exchange (SEC) case against an Internet gambling site that ran a "virtual stock exchange." The SEC claimed that the website, StockGeneration, was violating securities laws, and obtained a court order in June of last year that essentially shut down the site and froze the company's assets.
Federal District Court Judge Joseph L. Tauro said that what the website offered was a fantasy game, and that it therefore did not engage in the fraudulent sale of securities.
Here's how the game works: players pay to play, and "buy" and "sell" fantasy stocks under fake names. But here's the catch (and the eerie part) - there is absolutely no rhyme or reason to the performance of the "fantasy" stocks. Sound familiar?
"It's entirely up to the controllers of the game," said Daniel Small, the attorney for StockGeneration, in the AP story. "It's totally chaotic, depending on what the mangers of the game say would be fun that day. It's a game, it's not determined by any outside forces or events."
Many real life stock-pickers might concur with you on that one, Mr. Small.
"I think of it more like a roller coaster ride than a stock market," added Small. "You pay some money, you have a fun time... then it's over," he added.
A lot of investors, particularly those who attempted to market-time with risky tech stocks last year, might agree with the roller coaster analogy - only they're still puking their guts out after the ride.
The StockGeneration home page had this giddy message posted on it:
"In the wake of SG's momentous victory over the SEC, we are now preparing to recover frozen funds and re-open the game as soon as possible. We would like to take this opportunity to thank all of you for your support throughout this difficult period."
The statement was signed "The Management of the Most Famous and Most Profitable Online Gaming Experience in the History of the Internet."
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