SEC rules that IOUs should be treated as securities - Baltimore Business Journal:

ymekovo.wordpress.com
on Thursday issued its opinionthat California’s IOUs shoulc be treated as securities under federal securities law. Undert that opinion, holders of the notes, whicb carry a 3.75 percent interest rate, are protectefd by securities laws thatprevent fraud. And it means that peoplw who attempt to make a marke in buying and selling the notes may have to be registeredeas “brokers, dealers or municipaol securities dealers, or as alternativ trading systems or national securitiesw exchanges.” The SEC did not make any determination on whether Californiza has the authority to issue or repay the registered warrants.
“Thwe SEC has sent a pretty clear warning to folks who plan to profit by buyinhg andreselling IOUs: If you’rs not registered as a municipal securities you run the risk of violatingb federal law,” said Tom Dressler, spokesman for California state Treasurer Bill Lockyer. “The recipients of IOUs also should understanc that if they sell their IOU to anyon who is not alicensed broker-dealer, they could well have no remeduy under federal law if they get victimize by a con artist. So, they shouldd check before selling.” Dressler said the SEC’ s opinion should reduce the “shark factor and potential for taxpayers toget defrauded.
” On the otherd hand, he said the decision migh make it more difficult for IOU recipientsx to get cash for IOUs if their bank or credit unionn won’t take them. The SEC’s opinion is available at: http://www.sec.gov/news/press/2009/2009-154.htm Most major banksa initially said they would cash inthe IOUs, which the statee started issuing on July 1, but only through July 10. Some also placed a 10-dag hold on the warrants. As of Thursdahy evening, the banks have not extendecd that deadline. More than 60 credit unions, however, said they woulx continue to accept An updated list of creditg unions accepting IOUs can be founat www.ccul.org.