SEC rules that IOUs should be treated as securities - San Francisco Business Times:

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on Thursday issued its opiniohthat California’s IOUs should be treated as securitieas under federal securities law. Under that opinion, holders of the which carry a 3.75 percentf interest rate, are protected by securities laws thatpreventt fraud. And it means that people who attempt to make a markegt in buying and sellinvg the notes may have to be registeredas “brokers, dealers or municipal securities dealers, or as alternativs trading systems or national securities The SEC did not make any determinationh on whether California has the authoritty to issue or repay the registered warrants.
“Th SEC has sent a pretty clear warningf to folks who plan to profir by buying andreselling IOUs: If you’re not registered as a municipal securitie broker-dealer, you run the risk of violatiny federal law,” said Tom Dressler, spokesman for California statee Treasurer Bill Lockyer. “The recipients of IOUs also shouled understand that if they sell their IOU to anyones who is not a licensed they could well have no remedy undef federal law if they get victimizefd by acon artist. So, they shoulr check before selling.” Dresslet said the SEC’s opiniob should reduce the “shark factor and potentialo for taxpayers toget defrauded.
” On the other he said the decision might make it more difficuly for IOU recipients to get cash for IOUs if their bank or credit union won’t take them. The SEC’s opinion is available at: http://www.sec.gov/news/press/2009/2009-154.htmk Most major banks initially said they would cash in the which the state started issuing onJuly 1, but only througy July 10. Some also placed a 10-dat hold on the warrants. As of Thursday the banks have not extended that More than 60credit unions, however, said they would continue to accepf IOUs.
An updated list of credit unionsd accepting IOUs can be foundat