Posted By:
Mike MasinickWe passed our whole business plan through a team of lawyers before we began. While the laws are always, of course, open to interpretation, it is unlikely that the SEC would reasonably consider sports cards to be a "security" in their sense of the word.
A security that the SEC deals with is a share in a business sold to raise funds for the business or to raise funds for a certain project. While some of you may have expectation of future results for sports cards and the word "investment" is thrown around, that is not how they are marketed by us or any of the CURRENT major retailers. They know better than to say that the cards they sell today will be worth more in the future.
The people in our marketplace are purchasing a share of ownership in a physical item. What that item represents to them personally or to the marketplace is irrelevant. It's still a physical item that does not represent anything else (unlike a stock certificate which represents ownership in the profits and losses of an actual company). These physical items may go up or down in perceived "value", but that does not change the physical item in any way or change what they actually own. While we do have clauses in our user agreement for the sale of items, it is unlikely that many of our items will ever leave our marketplace once they enter.
That said, we have made our marketplace as transparent as we possibly can. You'll know exactly how many shares any of the big holders of an item have before making your purchase and we do our best to make all of the information necessary to make an informed decision available to everybody. This is what the SEC is in place to make sure of... and even though we don't feel we are covered by the Securities acts of 1933 and 1934, we will do our best to give the market users any information requested in accordance with those documents.
You're buying part of a sports card. That's it. We wrap it into a nice interface to make it more fun, pretty, and interesting and give users the look and feel of stock trading software, but it's still a sports card. Wayne Gretzky would be proud.