iThe offer and sale of securities in California must be qualified unless the securities or transaction is exempt. Corporations Code Section 25100(b) exempts any security "issued or guaranteed . . . by any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor; or any certificate of deposit for any of the foregoing".
One problem with this exemption is that it is the failure of the Corporations Code to define "maintains diplomatic relations". A search of the Bureau of Consular Affairs website lists only three countries with which the United States does not have diplomatic relations: Bhutan, Iran and North Korea.
No one knows if North Korea and the United States will reach an agreement on diplomatic relations. If that occurs, we may see sales of North Korean bonds in California without qualification.
