SEC warns buyers, sellers of California IOUs

July 10, 2009 | Kitty Felde | KPCC

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Attention Craigslist entrepreneurs: if you’re dabbling in California’s IOU market, the feds may be after you. KPCC’s Washington Correspondent Kitty Felde reports.

California may issue up to $3 billion in IOUs this month. If you’re patient, you can collect your money in October, plus 3.75 percent interest. But entrepreneurs on Craigslist are looking for folks who can’t wait and are willing to sell their IOUs for less than the dollar amount.

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Not so fast, says the Securities and Exchange Commission. The regulatory agency says that the IOUs are securities and that people who buy and sell them “may need to register as brokers or dealers." The SEC says that failure to register could land you in court and could result in fines. Information about who needs to register can be found on the Securities and Exchange Commission Web site.

David Grant
4 months, 1 week ago

This is nothing more than a scare tactic. The SEC has no legal authority to regulate IOU's, aka registered warrants. These warrants are not the same as municipal bonds, in that bonds are a contractual obligation for money lent, whereas IOU's are just that, IOU's to temporarily escape a legal obligation to pay up for products and/or services rendered. Note also, that the SEC states "may need to register as brokers or dealers". There is no obligation on the part of the buyer or seller to use a third party to exchange these warrants.

Robert Brown
4 months, 1 week ago

Neither Craigslist or eBay is operated by a licensed and bonded broker-dealer. Therefore they cannot legally accept any type of posting of securities. In addition, these and other sites like them have been used in an attempt to raise capital, this action is also inappropriate. It is time the SEC consider reviewing all social networks that accept these postings.

Chris A Meade
4 months, 1 week ago

Robert Brown must be a Federal guy or a stock / broker Guy. Robert its none of your bussiness. Its time that the Goverment starts to stay out of the peoples way. Why do you think this country is in the shape that it in.

KingofthePaupers
4 months, 1 week ago

Jct: There’s nothing wrong with small denomination California State IOUs if anyone can pay their taxes with them. When Argentina’s government workers were faced with cuts, their unions talked 6 state governments into paying them with small-denomination state bonds which could be used to pay for state services and taxes by everyone.
When the local currency is pegged to the Time Standard of Money (how many dollars per unskilled hour child labor) Hours earned locally can be intertraded with other timebanks globally! In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours. U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
See http://youtube.com/kingofthepaupers
Too bad California IOUs won’t be accepted in payment for state taxes and services like state bonds were in Argentina. Too bad California IOUs will be denominated too big to use as local currency. Too bad Argentina people were smart enough to avoid the tent-cities catastrophe and California people are too stupid to follow their example.
If they make IOUs legal tender, I take it all back.

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