Date: Wed, 31 Jul 2002 12:38:06 -0400 (EDT) From: "Ian Grigg" <[EMAIL PROTECTED]>
On Monday 29 July 2002 01:31, PlanetGold wrote: > http://planetgold.com One thing here made me think. planetgold: Why are you so secretive about the physical metals you manage? James: The reason we are over-protective and do not list the serial numbers (and/or locations) of the bars in the E-Bullion reserve is because that would expose the bars themselves to frivolous lawsuits. If someone knows the serial number of the bar and where it is located they can file frivolous motion(s) and attempt to put liens against one or more of the specific bars. Mr Fayed is balancing the risk of frivolous actions on the individual bars against the risk of the gold not being there, due to insider fraud. Is there merit in this approach? On the surface, there is, we have already seen a number of lawsuits in this evolving industry. And of course, we can find critics who claim frivolity for all of them. (Goldmoney actually attempts to avert this by disclaiming liens in its agreement. Somehow, I don't think that clause compelling, but, IANAL, and at least they have thought about the issue.) The counter argument is persuasive. Frivolous lawsuits are: a) frivolous, and any judge would see the reason in limiting the damage to something that did not destroy the business in the process. That is, a reasoned application in response should redress that danger, b) frivolous, and they will be filed anywway. The Plaintiffs will pick another target or another way. So, one would think that the cost from such would be mitigated by careful attention to the account agreement and other contracts. And then dealing with it when it happens. What then is the risk of the gold not being there? Recent events give us an answer: 2 out of 6 (?) systems are alleged to have collapsed with incomplete or totally lost client assets. (Like Mr Fayed, I'll wait until the full facts are in place before saying too much, but I share his sense of concern.) In both cases they did not fully reveal or audit their balance sheets. Thus, whilst the customers were led to believe, the insiders were led to reallocate. This is a serious and present danger to all account holders. Without getting into details, it would appear that publishing holdings in a detailed manner, including locations and serial numbers, would go a long way towards reducing the freedom of insiders to defraud. I would cast my vote against the secrecy of the bars (if I had a vote, that is, as I have no metal stored in e-Bullion). Even with the presence of frivolous litigation, the danger of insider fraud has to be the number one risk that Issuers and their users lose sleep over. -- iang __________________________________________________ Do You Yahoo!? Yahoo! Health - Feel better, live better http://health.yahoo.com --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
