SEC Charges Illinois With Securities Fraud And Lets It Off With A Warning

 Posted: 13 Mar 2013 09:13 AM PDT

This week, Illinois became only the second state in U.S. history to by charged with securities fraud by federal regulators (New Jersey was the first, in 2010). On Monday, the Securities and Exchange Commission (SEC) accused Illinois of deceiving investors regarding the health of its state employee pension funds, in a series of bond offerings from 2005 to 2009. In its cease-and-desist complaint, the SEC claimed:

Specifically, in numerous bond offerings from approximately 2005 through March 2009, the State misled bond investors by omitting to disclose information about the adequacy of its statutory plan to fund its pension obligations and the risks created by the State’s Structural Underfunding of its pension obligations. During this same time period, the State also misled bond investors about the effect of changes to that plan, including the Pension Holidays in 2006 and 2007.

Illinois settled immediately, without either admitting or denying the charges. The state did not have to pay a penalty, which, considering the extent of its pension funding shenanigans, is surprising, to put it mildly!….To Read More…..