July 9, 2009

Trading California IOUs on the Web

This recent story about trading of California’s registered warrants on eBay caught my eye. My understanding is that the warrants are IOUs issued by the state and have a maturity date of October 2, 2009.

Thinking out loud, the warrants may fall within the ’34 Act exclusion from the definition of a “security” in Section 3(a)(10) for a “note, draft, bill of exchange or banker’s acceptance, which has a maturity date at the time of issuance not exceeding nine months.” This assumes that a California registered warrant fits within Section 3(a)(10)’s terms (e.g. maturity date of 9 months or less, etc.).

Interestingly, I understand that California’s definition of the term “security” doesn’t have the same 9-month exclusion. Therefore, someone who is engaged in the business of effecting transactions in these warrants might be subject to licensing as a broker-dealer. Further, offers and sales could be subject to California’s antifraud statutes. For example, a state official with material, non-public information about the state who negotiates a warrant could be subject to California’s insider trading statute.

9 Trade Groups Join to Influence Accounting Standards

As reported by in this article, 9 trade groups representing the financial, insurance, banking, real estate and other industries have united to create a coalition with the goal of influencing accounting standard-setters who are working on revising the rules for financial instruments.

The new coalition – known as the “Financial Instruments Reporting and Convergence Alliance” or “FIRCA” – includes the American Council of Life Insurers, the Commercial Mortgage Securities Association, the Council of Federal Home Loan Banks, the Financial Services Roundtable, the Group of North American Insurance Enterprises, the Mortgage Bankers Association, the Property Casualty Insurance Association of America, the Real Estate Roundtable and the U.S. Chamber of Commerce.”

According to FEI’s “Financial Reporting Blog,” FASB Chair Bob Herz recently gave a speech noting threats to accounting principles include “politicization” by “special interests.”

Compliance Programs under Obama Administration

In this podcast, Jeff Kaplan of Kaplan & Walker discusses corporate compliance in the current environment, including:

– What’s new in the compliance field since last year
– What he expects from the Obama administration in the area of corporate compliance
– The responsibilities of general counsels in this environment
– Some practical guidance for making sure that senior officers understand and are accountable for their compliance responsibilities

– Broc Romanek