Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 4

SG Ltd., a Dominican corporation, operates a website called StockGeneration. The website's "virtual stock exchange" offers "players" the opportunity to invest real money in eleven "virtual companies," one of which is called the "privileged company." The privileged company, the website proclaims, is "supported by the owners of SG, this is why its value constantly rises; on average at a rate of 10% monthly (this is approximately 215% annually)." Is SG selling securities? [SEC v. SG Ltd., 265 F.3d 42 (1st Cir. 2001).]