New Jersey Settles SEC Fraud Claims
The state agreed to settle the SEC case without admitting or denying the agency's findings, Bloomberg News reported.
The SEC said today that New Jersey gave investors the false impression that its Teachers' Pension and Annuity Fund and the Public Employees' Retirement System were adequately funded, when in reality the state would have to cut services or raise taxes to make contributions.
"This is an area of concern," Elaine Greenberg, head of the SEC's municipal securities and public pension fund unit, told Bloomberg News. "We hope to alert other states and municipalities of their disclosure obligations under the federal securities laws as it pertains specifically to their pension fund liabilities."
The suit was the first time the SEC has sued a state for breaking federal security laws. The agency is cracking down on fraud in the $2.8 trillion municipal bond market.
New Jersey is the country's third-most indebted state, after California and New York. It has a $66.9 billion pension system, including seven funds. The system was underfunded by $46 billion as of June 30, 2009.