IOU recipients are beginning to trade them like currency [sic], forcing the California state treasurer's office to issue guidelines if they are sold through eBay (EBAY), Craigslist or other means.

California's treasurer is telling recipients of the IOUs that if they sell them to third parties, they will be redeemed by the state treasurer's office only if accompanied by a notarized bill of sale signed by their listed payee.

taxalert.Copythat?taxalert. ht Mish

Speculation is rising over whether California's tax-exempt IOUs, technically registered warrants [as opposed to bill of exchange (indemnity or payment)*?], can be bought, sold and traded.

The Securities and Exchange Commission must first determine if the IOUs are securities [certificate of ownership or beneficial interest?] to regulate them, said Ernesto Lanza, general counsel to the Municipal Securities Rulemaking Board, adding that the board was not working directly with the commission on that decision.

"It looks like it has all the hallmarks of a security," Lanza told Reuters. "If they are securities, I think they're pretty clearly municipal securities."

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*bill of exchange, an ancient American cheque:"Exchange in relation to barter not of goods but of the value of goods, a payment in one place being exchanged for a payment in another place. The popular statement of the theory of exchange represents four principals involved in two transactions. A and B are two persons residing in one place different from the cash from C, so that, assuming the two transactions to be of equal value, one piece of paper satisfies the four parties to these two transactions, and the trouble, expense and risk of sending money from both places are avoided. The piece of paper which performs the service may be a telegraphic order, cheque or bill of exchange."

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