Securities Law Updates | New Releases/No Action Letters
July 21, 2009
SEC: Recently Issued California IOUs Are “Securities” under Federal Laws
Release on CA State IOUs
2009-154, 7/9/2009
The U.S. Securities and Exchange Commission (“SEC”) has issued an investor alert relating to its determination that the State of California’s recently issued IOUs are “securities” and therefore those holding the IOUs are entitled to protections provided under federal securities laws.
By way of background, California began issuing the IOUs, or “registered warrants,” on July 2 to certain individuals and entities, including citizens who were entitled to a tax refund or vendors who were entitled to payments. These IOUs bear interest and are negotiable, which means they can be sold to third parties.
In its release, the SEC explained that its…
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