SEC Charges New Jersey with Securities Fraud
August 21st, 2010You’ll love the penalty: “The state was not required to pay any civil fines or penalties, but ordered to cease and desist from future violations.”
Via: Reuters:
U.S. regulators said on Wednesday they charged New Jersey with securities fraud for not disclosing to municipal bond investors that it was underfunding its pensions.
New Jersey, the first state ever hit with securities fraud charges by the Securities and Exchange Commission, agreed to settle the case without admitting or denying the findings, the SEC said. The state was not required to pay any civil fines or penalties, but ordered to cease and desist from future violations.
New Jersey offered and sold more than $26 billion of municipal bonds in 79 deals between August, 2001 and April, 2007, according to the SEC.
The offering documents “created the false impression that the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS) were being adequately funded, masking the fact that New Jersey was unable to make contributions to TPAF and PERS without raising taxes, cutting other services or otherwise affecting its budget,” the SEC said.
“The state of New Jersey didn’t give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.
