What happens when the government treats online "play money" like real securities?

In this episode of "The Trial Lawyer's Handbook," litigation attorney Dan Small recounts a civil enforcement action brought by the U.S. Securities and Exchange Commission (SEC) against SG Limited, an early internet stock market game created by programmers overseas that built a large U.S. player base. He explains the SEC's attempt to characterize the game's virtual shares as unregistered securities and resulting allegations that the platform functioned as a Ponzi scheme, leading to a court-ordered freeze of approximately $5.5 million. Mr. Small walks through SG Limited's defense and the strategic choice to keep the case grounded in a clear, common-sense narrative, emphasizing that the platform presented itself as entertainment, not an investment. The episode spotlights the power of storytelling in trial advocacy, illustrated by how the district court responded to SG Limited's arguments in ultimately dismissing the SEC's case.

Much like video games have a sequel, however, the story does not end there. In the next episode, Mr. Small continues the narrative at the appellate level.