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- Title
Securities Regulation in a Virtual World.
- Authors
Thompson, Shannon L.
- Abstract
The introduction of stock exchanges into virtual worlds like Second Life raises a multitude of issues for its users and real world financial regulators like the Securities and Exchange Commission. This Article describes the recent phenomenon of virtual worlds, and argues that the financial instruments traded on virtual stock exchanges are securities for the purpose of federal securities laws and that under these laws, virtual world securities should be subject to registration requirements and anti-fraud liability. It is likely that the cost of compliance with the federal securities laws would cause the virtual exchanges to cease to exist, potentially resulting in a loss of valuable research opportunities. Thus, although virtual securities are subject to the federal securities laws, the SEC should consider abstaining from enforcement. This Article proposes that improved methods of virtual world self-regulation, such as the development of effective trust networks or risk reduction methods, will serve to ensure that investors receive information about a company's business and are protected from fraud.
- Subjects
STOCK exchanges; UNITED States. Securities &; Exchange Commission; VIRTUAL reality; SECURITIES; FRAUD prevention
- Publication
UCLA Entertainment Law Review, 2009, Vol 16, Issue 1, p89
- ISSN
1073-2896
- Publication type
Article
- DOI
10.5070/lr8161027122