Meanwhile, the Municipal Securities Rulemaking Board, a national body that regulates the trading of municipal debt, is looking into whether the IOUs should be considered securities.
If they are, anyone who makes a business out of trading them could be breaking federal law if the business is not registered with the Securities and Exchange Commission, said Ernesto Lanza, general counsel of the board.
The IOUs have “all the hallmarks of being a security,” Lanza said.
But the state controller’s office, which issues the IOUs, said they weren’t securities.
“They are a form of payment,” said Garin Casaleggio, a spokesman for Controller John Chiang.
