Illinois Pension Funds Disclosure Under SEC Scrutiny
The Securities and Exchange Commission has launched an investigation into the disclosure of Illinois regarding its pension funds to see whether the state provided the necessary information to the buyers of the bond or misled them from the real risk they were facing.
The commission sent communications to Illinois September 2010 about the possibility of a long-term savings from pension reform law, according to a filed prospectus which detailed plans of the state to issue a $3.7 billion taxable pension bonds offering next month. The state will pour the revenue from the sale to its pension funds that have been ailing due to weak funding.
Now, the SEC is probing the state’s pension funds to determine whether Illinois treated its future savings as current reductions in the cost of pension funds. The pension funds system passed last year.
Amid the investigation into the disclosure of the pension funds, the SEC said in the same document that it did not want the state to interpret the move “as an adverse reflection on any entity or individual involved.” Illinois should not take the inquiry as an indication that there was an established violation of the securities laws, the prospectus stated.
A spokeswoman for Governor Pat Quinn, Kelly Kraft, said the state has been cooperating with SEC’s investigation, adding that the state’s disclosures “have always been accurate and complete.” She said before the SEC could launch the probe, the state of Illinois has already taken steps to have its pension funds method improved.
The SEC has charged August 2010 the state of New Jersey with securities fraud for misrepresenting its disclosures on pension funds and for alleging that it had assets, which did not actually exist.