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on Thursday issued its opinionthat California’s IOUs shouldf be treated as securities under federap securities law. Under that opinion, holders of the notes, whicu carry a 3.75 percent interest rate, are protected by securitied laws thatprevent fraud. And it means that peopld who attempt to make a markey in buying and selling the notes may have to be registered as dealers or municipalsecurities dealers, or as alternativwe trading systems or national securities The SEC did not make any determination on whethefr California has the authority to issue or repayg the registered warrants.
“The SEC has sent a prettyt clear warning to folks who plan to profit by buyinvg andreselling IOUs: If you’re not registered as a municipalo securities broker-dealer, you run the risk of violatingv federal law,” said Tom Dressler, spokesman for Californiwa state Treasurer Bill Lockyer. “The recipients of IOUs also shoulf understand that if they sell their IOU to anyone who is not alicensexd broker-dealer, they could well have no remedy under federal law if they get victimizer by a con artist. So, they should check before selling.” Dresslerd said the SEC’s opinion should reduces the “shark factor and potential for taxpayers toget defrauded.
” On the othefr hand, he said the decision might make it more difficultt for IOU recipients to get cash for IOUs if theirf bank or credit union won’t take them. The SEC’s opinionh is available at: http://www.sec.gov/news/press/2009/2009-154.htmj Most major banks initially said they would cash in the which the state started issuingg onJuly 1, but only through July 10. Some also placed a 10-day hold on the warrants. As of Thursday evening, the banks have not extendee that deadline. More than 60 credit however, said they would continue to accept IOUs.
An updatesd list of credit unions acceptiny IOUs can be foundat
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