Topic: My Criteria for Approving Securites on LTC-GLOBAL and BTC Trading Corp - page 3. (Read 4286 times)

> I will disapprove any bond that does not promise to pay back the principal (face value).

And that's why I don't give a shred of trust to your "criteria". Take mining for example - it is simply impossible to return the principal if you already brought deprecated mining equipment. What your criteria means is that those legit mining bonds will not be approved, but scam bonds who can be magical unicorns and scam everyone will be able to meet your criteria.

A security must be approved by a certain number of LTC-GLOBAL shareholders (known as "moderators") before the security can be listed on the LTC-GLOBAL or BTC Trading Corp. exchanges. However, without published criteria, it is difficult, tedious, and time-consuming for an issuer to gain approval of the security. For this reason, I think moderators should publish their criteria, and here are mine.

Note: This is a copy of a post I previously made here: http://forum.litecoin.net/index.php/topic,906.0.html

Please keep in mind that these criteria are mine, and other moderators will have different criteria. Some consider my criteria to be too strict or too cumbersome. I don't think so. Bitcoin is no longer somebody's lunch money.

Also, note that some of these criteria also apply to securities after they have been listed. I will change my vote if necessary, although that doesn't change the status of a security that has already been listed.

I can't list all of my criteria because each security must be assessed individually, but the goals are:

• Full disclosure.
• Ability to determine the value of the security.
• Legitimacy.
• Information quality.

These are not my goals:

• Risk reduction (other than by disclosure).
• Conformity.
• Political or social goals

Stocks

A share of stock represents ownership of a company and all the assets owned by the company.

• Stocks must have a business plan -- a detailed description of how the business operates and how it plans to succeed. Without this information, it is not possible to determine the value of the company.
• Balance sheet and profit/loss statements must be published periodically. A start-up must provide these as projections in its business plan. Without this information, it is not possible to determine the value of the company.
• The rights granted by owning shares should be specified. There is no good reason to leave this out, or to leave it open to interpretation. It could be something like, "a share represents partial ownership of this company and all the assets held by this company". This particular statement guarantees that if the company shuts down, the investor will receive his/her share of the assets of the company.
• Detailed information about dividends should not be specified in the prospectus/contract. Dividends must be allowed to be adjusted by the management.

Bonds

A bond is a loan. It normally pays interest, and the principal is returned after a period of time. However, there is a kind of bond called a perpetual bond in which interest is paid forever, but the principal is normally never returned.

• I will disapprove any bond that does not promise to pay back the principal (face value).
• The interest rate must be specified. If it varies, then a precise description of how the interest is determined must be specified.
• The face value of a bond (per share) must be specified.
• The terms of the bond cannot be changed, except by unanimous bondholder consent.
• Collateral must be provided, or information must be provided proving that the face value plus interest can be paid.
• Detailed information about the financial state of the issuer must be published periodically.

Funds

A fund is a company that holds investments and pays shareholders any income derived from investment operations. A share in a fund represents partial ownership of the fund assets, but not ownership of the fund or fund manager. The fund uses money obtained from selling shares to purchase investments.

• A detailed description of how funds are invested must be provided. Investors must be able to determine if the investment strategy and goals match their own.
• Information about expenses and fees must be provided.
• Investment holdings and fund performance information must be published periodically.
• Funds must offer to buy back shares at NAV if there is any change to the contract.
• The rights granted by owning shares should be specified. There is no good reason to leave this out, or to leave it open to interpretation. It could be something like, "a share represents partial ownership of the assets of this fund, but does not represent ownership of the fund or fund manager". This particular statement guarantees that if the fund shuts down, the investor will receive his/her share of the assets.
• Shares of "pass-through" funds must be exchangeable for the assets that back them.
• Proof of possession of the holdings should be provided, if possible.
• Funds should not sell new shares for less than NAV.

General

• I will disapprove a security that appears to be a scam.
• I will disapprove a security that is no longer actively managed or traded.
• I will disapprove a security whose market capitalization falls below some threshold.
• My vote is not anonymous unless I forget to check the box. My name on Litecoin Global and BTCTC is oZoNo

I welcome comments and suggestions.