Skip to comments.California IOUs can be considered securities, SEC says
Posted on 07/12/2009 3:26:38 AM PDT by TigerLikesRooster
California IOUs can be considered securities, SEC says
Agency guidance helps create a secondary market for IOUs, helping with prices
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) -- The Securities and Exchange Commission late Thursday issued guidance identifying the IOUs being issued by California as "securities," rather than just obligations of the economically troubled state.
The Golden State issued the IOUs last week to conserve cash and pay off bondholders.
"The staff of the SEC has expressed its belief that California's recently issued IOUs are 'securities' under federal securities law. As such, holders of these IOUs and those who may purchase them are protected by the provisions of the federal securities laws that prohibit fraud in the purchase or sale of securities," the agency said.
The regulator is recommending that the IOUs, which carry an annual interest rate of 3.75%, be regulated as municipal debt, a form of security, by the Municipal Securities Rulemaking Board.
Identifying the IOUs as securities creates a regulated secondary market for them, which make it easier for their holders to sell them at a fair price.
Tom Dresslar, a spokesman for California State Treasurer Bill Lockyer, lauded the SEC's announcement, saying in a statement: "The SEC has sent a pretty clear warning to folks who plan to profit by buying and reselling IOUs: If you're not registered as a municipal securities broker-dealer, you run the risk of violating federal law."
(Excerpt) Read more at marketwatch.com ...
This makes it harder for a person with a $1 million IOU to sell it to you or me for $900,000. Illegal actgually.
This makes the situation worse.
So no California can print “securities” to pay its bills...
In the old days that was called defaulting on your debts...
But the Federal government doesn’t want anyone to notice that California has defaulted on its debt so they put up smoke and mirrors and try to continue the illusion that California is a-okay...
But Mr. Obama can screw millions of General Motors and Chrysler shareholders and bondholders out of billions of dollars? Which way to the looking glass?
Maybe I could just print up some nifty IOU’s and go on a shopping spree. Or maybe.... I know, hire a new employee for my design company and pay him with IOU’s.
When money becomes worthless, then what are we going to use?
"Gold! Just tell them that Gordon Liddy sent you!"
“California IOU’s can be considered securities?”
Bananas, bananas, 39 cents a pound!
Or some insider will offer to purchase them for pennies on the dollar knowing the “next” CA gov will more then likely be able to raise taxes to pay them off.
Same ol’ Story in CA, two wolves and lamb looking at a menu..
“So no” was supposed to be “So now”... Sorry...
Thats the thing I was seeing: if these ARE securities, CA could declare bankruptcy and make them go away like GM and Chrysler did to even their secured debt holders.
[Where are the lawsuits about that, btw???]
Next time you go to the bathroom STOP AND THINK! Do you really want to waste thousands of dollars in securities just to have a clean butt? :-)
Thanks for posting TLR. Disgusting.
These con-men are putting us in dire straits. We need to bang the drumsticks/clubs on their collectivist heads...(music to read this thread by)...
I guess the next step wtill be Obama mandating that the banks accept the IOUs.
There's a difference?
some might find this interesting:
Now pay attention to this. The big banks are INSOLVENT.
Then there’s this:
CIT as in Citibank.
Is it going to happen? Who knows. But the notion that is might be out there is plenty scary, don’t you think?
Nothing like having an economic nitwit, who is “set for life” in charge of the situation, gang.
He gets to play with the “house money.”