SEC Charges NJ — is IL Next?
by Kristina Rasmussen This bit of news is creating quite a stir in certain circles: The U.S. Securities and Exchange Commission (SEC) charged the state of New Jersey Wednesday with lying and withholding information to investors in billions of dollars worth of municipal bond deals. The allegations involve $26 billion of bond offerings from 2001 to 2007 in...
This bit of news is creating quite a stir in certain circles:
The U.S. Securities and Exchange Commission (SEC) charged the state of New Jersey Wednesday with lying and withholding information to investors in billions of dollars worth of municipal bond deals.
The allegations involve $26 billion of bond offerings from 2001 to 2007 in which the state obfuscated its underfunding of public employee pension funds, creating a false impression of fiscal stability.
The state became the first ever charged with violations of federal securities laws, SEC enforcement director Robert Khuzami announced.
The big question is: Is Illinois next?
Illinois has some $83 billion in unfunded public pension liabilities, and there’s no plan in place to make this year’s $4 billion pension payment (and we borrowed last year’s payment). Meanwhile, we’re selling bonds left and right to finance new spending (the comptroller’s latest newsletter does a good job of outlining the billions in capital bonds being sold). A recipe for disaster?