3/11/2013 1:36:00 PM State charged with securities fraud Quinn agrees to a cease-and-desist order
SPRINGFIELD, Ill. (AP) — The federal government is charging Illinois with securities fraud, claiming it misled investors about the health of its pension system.
Gov. Pat Quinn’s office said today that the state has agreed to settle the Securities and Exchange Commission case.
Gov. Pat Quinn’s office agreed today to a cease-and-desist order in the Securities and Exchange Commission case. The SEC said in a news release that Illinois admitted no wrongdoing but has made more complete disclosures since 2009.
The case revolved around more than $2 billion of municipal bonds sold from 2005 to early 2009 to pay state obligations to public-employee pension programs.
The SEC charged that the state did not adequately inform investors that a 50-year funding plan adopted in 1995 did not adequately cover pension liabilities.
The five pensions systems are now $97 billion in debt and a solution is lawmakers’ top priority.
According to a press release issused by The Governor’s Office of Management and Budget, “The State believed it to be in its best interests to enter into a settlement with the SEC. The State has cooperated fully with the SEC throughout the inquiry. The State neither admits nor denies the findings in the order, which carries no fines or penalties.“
“While the State had disclosed various aspects of the under-funded status of its pensions,” the press release continued, “the SEC contended the State had not adequately described the impact of the 50-year payment schedule adopted by the General Assembly and signed into law in 1994. That plan established a non-traditional funding method, including, among other features, a “ramp” period of escalating payments from 1995 to 2010 and a 90 percent funding target over a 50-year period. The SEC also contended that the State had not adequately described the effect of the State’s reduced contributions to its pension systems in 2006 and 2007.”