Bearer bond
Encyclopedia
A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically holds the paper on which the bond is issued owns the instrument. This is useful for investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...

s who wish to retain anonymity. Recovery of the value of a bearer bond in the event of its loss, theft, or destruction is usually impossible. Some relief is possible in the case of United States public debt
United States public debt
The United States public debt is the money borrowed by the federal government of the United States at any one time through the issue of securities by the Treasury and other federal government agencies...

.

History

The bearer bond most possibly has its origins in the post Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...

 United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. In many respects the Reconstruction (1865–1885) was funded on these bonds. Their use in avoiding taxation became more popular after World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

. Europe and the remainder of the Americas
Americas
The Americas, or America , are lands in the Western hemisphere, also known as the New World. In English, the plural form the Americas is often used to refer to the landmasses of North America and South America with their associated islands and regions, while the singular form America is primarily...

 adapted the use of these bonds in their own finance systems for similar reasons of utility.

Bearer bonds have historically been the financial instrument of choice for money laundering, tax evasion, and concealed business transactions in general. In response, new issuances of bearer bonds have been severely curtailed in the United States since 1982.

In the United States all the bearer bonds issued by the U.S. Treasury have matured. They no longer pay interest to the holders. As of May 2009, the approximate amount outstanding is $100 million.

In June 2009, Italian financial police and custom guards seized documents purporting to be U.S. bearer bonds, totaling $134.5 billion. The bonds were in $500 million and $1 billion denominations, although the highest denomination ever issued by the U.S. Treasury was $10,000. It was unclear what the purpose of the fake bonds was; the two men carrying them were not detained after the bonds were seized.

National policy and practice

In the United States, since the passage of the Tax Equity and Fiscal Responsibility Act of 1982
Tax Equity and Fiscal Responsibility Act of 1982
The Tax Equity and Fiscal Responsibility Act of 1982 , also known as TEFRA, was a United States federal law that rescinded some of the effects of the Kemp-Roth Act passed the year before. As a result of ongoing recession, a short-term fall in tax revenue generated concern over the budget deficit...

, the issuance of debt in bearer form has been substantially curtailed. The interest paid on any such bonds issued after 1982 would be non-tax-deductible by the issuer in the case of corporate bonds, and taxable income to the holder in the case of municipal bonds. In contrast, registered bonds retain favorable tax treatment.

In Central America
Central America
Central America is the central geographic region of the Americas. It is the southernmost, isthmian portion of the North American continent, which connects with South America on the southeast. When considered part of the unified continental model, it is considered a subcontinent...

, issuance of bearer bonds is typically the standard procedure for financing corporate and government debt. Bearer bonds have been used in this region in this way for a very long time.

Bearer bonds in popular culture

Since bearer bonds can have extremely high values, a physically manageable number of them can represent a very large amount of cash. For this reason, many movies and TV shows use bearer bonds when characters are on the hunt for very large sums of money (e.g., $10 million) (see also MacGuffin
MacGuffin
A MacGuffin is "a plot element that catches the viewers' attention or drives the plot of a work of fiction". The defining aspect of a MacGuffin is that the major players in the story are willing to do and sacrifice almost anything to obtain it, regardless of what the MacGuffin actually is...

). In paper currency, this amount of money would be unwieldy, filling up several suitcases. But with bearer bonds, this sum can be represented in a small, convenient package. Several popular films and the television series that feature bearer bonds in this role include the films Goldfinger
Goldfinger (film)
Goldfinger is the third spy film in the James Bond series and the third to star Sean Connery as the fictional MI6 agent James Bond. Released in 1964, it is based on the novel of the same name by Ian Fleming. The film also stars Honor Blackman as Bond girl Pussy Galore and Gert Fröbe as the title...

, Wall Street, License to Kill, Beverly Hills Cop
Beverly Hills Cop
Beverly Hills Cop is a 1984 American comedy-action film directed by Martin Brest and starring Eddie Murphy, Lisa Eilbacher, John Ashton, Judge Reinhold, and Ronny Cox...

, Rogue Trader
Rogue Trader
Rogue trader can refer to*Rogue trader, person who trades financially in an unauthorised manner*Rogue Trader , the autobiography of Nick Leeson, the man who caused the collapse of Barings Bank...

, Lethal Weapon 2
Lethal Weapon 2
Lethal Weapon 2 is a 1989 action comedy film directed by Richard Donner, and starring Mel Gibson, Danny Glover, Patsy Kensit, Joe Pesci, Derrick O'Connor and Joss Ackland...

, Die Hard
Die Hard
Die Hard is a 1988 American action film and the first in the Die Hard film series. The film was directed by John McTiernan and written by Jeb Stuart and Steven E. de Souza. It is based on a 1979 novel by Roderick Thorp titled Nothing Lasts Forever, itself a sequel to the book The Detective, which...

, Fun with Dick and Jane
Fun with Dick and Jane (2005 film)
Fun with Dick and Jane is a 2005 remake of the 1977 American comedy film of the same name, directed by Dean Parisot and written by Judd Apatow and Nicholas Stoller. It stars Jim Carrey and Téa Leoni as Dick and Jane Harper, an upper-middle-class couple who resort to robbery after the company for...

, Heat, Mission Impossible, Panic Room, Steal
Steal (film)
Steal is a 2002 action adventure film starring Stephen Dorff, Natasha Henstridge, Bruce Payne and Steven Berkoff. It was directed by Gérard Pirès and written by Mark Ezra and Gérard Pirès.-Plot:...

(aka Riders), Triple Tap
Triple Tap
-Cast:* Louis Koo – Kwan Yau-bok* Daniel Wu – Chong Tze-wai* Charlene Choi – Ting* Li Bingbing – Anna* Alex Fong – Miu Chi-shun* Lam Suet – Fong Chi-wo* Chapman To – Pang To-External links:* at the Hong Kong Cinemagic...

, The Da Vinci Code
The Da Vinci Code (film)
The Da Vinci Code is a 2006 American mystery thriller film directed by Ron Howard. The screenplay was written by Akiva Goldsman and based on Dan Brown's worldwide bestselling 2003 novel, The Da Vinci Code...

, and the TV series The Rockford Files
The Rockford Files
The Rockford Files is an American television drama series which aired on the NBC network between September 13, 1974 and January 10, 1980. It has remained in regular syndication to the present day. The show stars James Garner as Los Angeles-based private investigator Jim Rockford and features Noah...

, 24
24 (TV series)
24 is an American television series produced for the Fox Network and syndicated worldwide, starring Kiefer Sutherland as Counter Terrorist Unit agent Jack Bauer. Each 24-episode season covers 24 hours in the life of Bauer, using the real time method of narration...

, The Flash
The Flash (TV series)
The Flash is a 1990 American television series that starred John Wesley Shipp as the superhero, the Flash , and co-starred Amanda Pays. The series was developed from the DC Comics characters by the writing team of Danny Bilson and Paul De Meo, and produced by their company, Pet Fly Productions, in...

, Lois and Clark: The New Adventures of Superman, Law & Order: Criminal Intent
Law & Order: Criminal Intent
Law & Order: Criminal Intent is an American police procedural television drama series set in New York City, where it was also primarily produced. Created and produced by Dick Wolf and René Balcer, the series premiered on September 30, 2001, as the second spin-off of Wolf's successful crime drama...

, Monk
Monk (TV series)
Monk is an American comedy-drama detective mystery television series created by Andy Breckman and starring Tony Shalhoub as the titular character, Adrian Monk. It originally ran from 2002 to 2009 and is primarily a mystery series, although it has dark and comic touches.The series debuted on July...

, Burn Notice
Burn Notice (TV series)
Burn Notice is an American television series created by Matt Nix. The show stars Jeffrey Donovan, Gabrielle Anwar, Bruce Campbell, Sharon Gless, and, beginning in the fourth season, Coby Bell. The series premiered on June 28, 2007, on USA Network. On April 15, 2010, the show was renewed for its...

, Terriers
Terriers (TV series)
Terriers is an American crime comedy-drama television series created by Ted Griffin for FX. It premiered on September 8, 2010. The show was canceled by FX on December 6, 2010 after the first season.-Premise:...

, Alias
Alias (TV series)
Alias is an American action television series created by J. J. Abrams which was broadcast on ABC for five seasons, from September 30, 2001 to May 22, 2006...

, Standoff
Standoff (TV series)
Standoff is an American drama series that premiered on the Fox network on September 5, 2006. Created by Craig Silverstein, the series focused on an FBI Crisis Negotiation Unit whose members negotiated hostage situations and shared relationships. The show was produced by 20th Century Fox Television...

, White Collar
White Collar (TV series)
White Collar is a USA Network television series created by Jeff Eastin, starring Matt Bomer as con-man Neal Caffrey and Tim DeKay as Special Agent Peter Burke. It premiered on October 23, 2009. In December 2009, White Collar was renewed for a second season that began on July 13, 2010...

, Smallville
Smallville
Smallville is the hometown of Superman in comic books published by DC Comics. While growing up in Smallville, the young Clark Kent attended Smallville High with best friends Lana Lang, Chloe Sullivan and Pete Ross...

, Archer
Archer (TV series)
Archer is an American animated television series created by Adam Reed for the FX network. A preview of the series aired on September 17, 2009. The first season premiered on January 14, 2010. The show carries a TV-MA-LSV rating....

and Batman: The Animated Series
Batman: The Animated Series
Batman: The Animated Series is an American animated series based on the DC Comics character Batman. The series featured an ensemble cast of many voice-actors including Kevin Conroy, Mark Hamill, Efrem Zimbalist, Jr., Arleen Sorkin, and Loren Lester. The series won four Emmy Awards and was nominated...

.
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