SEC, New Jersey Settle Charges, But Should Someone Have Paid?
Law Blog
By Ashby Jones
Securities fraud. It might not be just for the private sector anymore.
The Securities and Exchange Commission, in its first securities-fraud case against a state, on Wednesday accused the state of New Jersey of misleading investors about the health of its two largest state pensions while selling billions of dollars in bonds.
New Jersey authorities settled the case without admitting or denying wrongdoing. No penalties were imposed. Click here for WSJ story; WSJ Article.
While it singled out New Jersey, the SEC is conducting several investigations into what other states disclosed about their weakened finances.
“We want to make sure that states or municipalities who go out and raise money from the public are adequately disclosing all material information in connection with their pension liabilities,” said Elaine Greenberg, head of the SEC’s municipal securities and public pension unit, which was created in January.
The SEC’s filing in the civil case described a series of moves that it alleged misled investors into believing the state was adequately funding the $34 billion Teachers’ Pension and Annuity Fund and the $28 billion Public Employees’ Retirement System.
The funds are the largest of seven funds in the $66.9 billion New Jersey retirement system. Among other things, the SEC said, the state didn’t disclose it had abandoned a five-year plan to fund the pension plans. The pension system covers 689,000 current employees and retirees.
In its settlement, New Jersey neither admitted nor denied wrongdoing but said it wouldn’t do it again. The SEC didn’t fine the state, citing its cooperation and remedial steps it has taken. No individuals were charged.
Some expressed disappointment that the SEC had not named the treasurers who certified the misstatements or the other professionals who helped New Jersey’s bonds go to market.
“Yes, they charged the State of New Jersey with fraud, but there’s no price paid here,” said Lynn E. Turner, a former chief accountant for the SEC, to the NYT. “There’s no fine, and no accountability on the part of any individuals.”
Grandpa
Yet again, another FRAUD settlement with the SEC in which no one admits wrongdoing. The SEC remains an inept institution and the lack of ethics within the financial industry even at the State Government level is disgraceful. I remain confident that the next generation of children and grandchildren will remember those admirable lessons of honesty and accountability in their adult years.
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