|A site that ran a “virtual stock exchange” is being pursued by the Securities and Exchange Commission after a U.S court of appeal ruled that there was an element of fraud about their set-up.|
The StockGeneration web site allows players to buy fictional ‘stocks’ in made-up companies, players can then win or lose money depending on whether their stocks go up or down. The stocks are controlled by the site’s game manager who decides which will gain or lose on the virtual market.
The SEC filed an initial complaint against the site in June 2000 but was ruled to have overreached it’s authority because the site presented itself as a game rather than an actual trading site. This decision has now been reversed by the court of appeals who are supporting the SEC’s view that the language on the site essentially represents and investment contract of some kind and is therefore misleading.
SEC District Administrator Juan Marcel Marcelino said that the decision “confirmed our position that this was (promoted as) investments.” The SEC will now seek to reimburse the sites ‘investors.’
The StockGeneration site has been closed and will remain so, it’s operators assets of $6.5 million have been frozen pending the results of the investigation.