The idea would be to designate California's registered warrants as securities. Any person or firm offering to make a market in the IOUs - bringing buyers and sellers together - would have to register as a broker-dealer and would be subject to federal anti-fraud rules. From the LAT:

Recipients of the IOUs still would be free to sell them or cash them anywhere they'd like. The SEC would be trying to ensure that some orderly markets develop for the scrip, given that major banks, including Bank of America and Wells Fargo, say they won't cash the IOUs after Friday.

The IOUs carry an annual interest rate of 3.75 percent, which has attracted some interest among investors. A spokesman for JPMorgan Chase left open the possibility that Friday's cut-off might be extended, but B of A and Wells Fargo are holding tight.