Agreed with most comments above: the GM acted wrong demoting this soon.

Even if the Master Looter was not handling the loot according to guildrules (a not so big guild with relatively little raiding experience might still run with their TBC rules, though there is now dual.. or this situation was not foreseen otherwise in the rules... or the lootmaster was dead wrong) the GM had the chance to speak up during the rolling phase and even after on the way to the next boss he could've called for a short break to redirect all raiders to the lootrules section on the forums to point out the looting wasn't handled as it should've been.
Items can be traded amongst raiders since last patch, so even after the item was given away it could've still be given to the GM. And even after that, a ticket to a Game Master does the trick.

Demoting overnight is the worst thing that can happen to an active officer. I once went against the GM who demanded in our casual, non-raiding guild, that everyone should uplink their professions to the website on a daily basis so everyone knew what everyone could craft at all times. A weekly upink would suffice. This brought me from officer (and former stand-in GM) back to "new member". Don't think i've ever been hurt that much ingame before and ever since in 3 yrs of play.

So, best find a nice guild mate.. And bring your friends with you ^^
/salute Haiko

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