08-21-2010, 08:43 PM
The reason I post this Huffington Post article is to point out their extreme partisan nature. Note the article below fails to mention that James Mcgreevey, New Jersey Governor from January 15,2002 to November 15,2004, who resigned, and Jon Corzine, former chairman and CEO of Goldman Sachs and New Jersey Governor from 2006-2010, the time period from which the bond sales were transacted, were both democrats. Why do they only mention New Jersey's new, conservative, Republican governor in their article? I don't think that they are being fair and balanced. I would be remiss if I didn't mention the fact that the Obama Administration has hired nearly a dozen people from Goldman sachs to work for his administration.Read on.
The state of New Jersey has settled federal civil fraud charges of failing to inform bond investors that it had not met obligations to its largest pension plans, federal regulators said Wednesday.
In announcing the settlement, the Securities and Exchange Commission said New Jersey did not give municipal bond investors enough information to fully assess the state's financial picture.
New Jersey was the first state ever charged for violations of the securities laws. New Jersey neither admitted nor denied the allegations. It did agree to refrain from future violations of the securities laws.
Many states around the country have been unable to fully fund their public employee pension plans in the financial crisis.
"It is an area of concern," Elaine Greenberg, chief of the SEC's municipal securities and public pensions unit, said in a telephone interview. "We want to make sure that states and municipalities are adequately disclosing" their pension fund liabilities, she said.
In a news release, the New Jersey attorney general's office and the Treasury Department said state officials cooperated with the inquiry. The state noted in the release that it responded to the situation by hiring outside lawyers in 2007 to advise the state on disclosure obligations and adopting new formal disclosure procedures.
No financial penalty was levied against the state. The SEC said it took into account state authorities' cooperation in its investigation and the action taken by the state to correct the situation.
New Jersey sold more than $26 billion in municipal bonds between 2001 and 2007 to raise money for economic development projects, such as roads and public works, the SEC said. But the bond sale documents didn't disclose that the state had failed to meet its financial obligations to two state employee pension funds. New Jersey likely couldn't contribute to the pension funds without raising taxes or cutting services, the SEC said.
As a result, investors in New Jersey's bonds lacked sufficient information to assess the state's financial status, the SEC said.
Story continues below
"All issuers of municipal securities, including states, are obligated to provide investors with the information necessary to evaluate material risks," Robert Khuzami, the SEC's enforcement director, said in a statement.
Since the start of the SEC's inquiry in April 2007, no rating agencies have downgraded New Jersey's credit rating "and the state has continued to make all required debt-service payments on the bonds," the state said in its release.
A spokesman for the state Treasury Department said repayment of bonds was never at risk. "The state of New Jersey has never failed to pay its bondholders," said the spokesman, Andy Pratt.
While New Jersey's bond rating hasn't been downgraded, Moody's Investors Service last year lowered the state's outlook â a step that could lead toward downgrading the rating, which would make it harder to borrow money. Gov. Chris Christie has said he took office of a state with an even worse financial crisis than previously believed.
Christie, a Republican, has promised he wouldn't raise taxes to balance the budget. He signed legislation last month capping local spending and property-tax growth at 2 percent a year. New Jersey's property taxes are considered to be at the highest rate in the country, nearly $7,300 annually for the average household.
The nation's $2.7 trillion muni bond market is used to finance schools, roads and hospitals around the country. Retail investors increasingly participate in the market, seeking safe investments with reliable returns.
The SEC last year proposed requiring brokers in municipal bonds to make fuller and more timely disclosures to investors.
Also last year, the agency reached a settlement with JPMorgan Chase & Co. in which the Wall Street bank agreed to pay $75 million in civil fines and forfeit $647 million in fees to resolve charges that it made unlawful payments to friends of public officials to win municipal bond business in Jefferson County, Ala. The scandal roiled Alabama's most populous county and brought the federal bribery conviction and ouster of Birmingham's mayor.
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AP Business Writer David Pitt in Des Moines contributed to this report.
The state of New Jersey has settled federal civil fraud charges of failing to inform bond investors that it had not met obligations to its largest pension plans, federal regulators said Wednesday.
In announcing the settlement, the Securities and Exchange Commission said New Jersey did not give municipal bond investors enough information to fully assess the state's financial picture.
New Jersey was the first state ever charged for violations of the securities laws. New Jersey neither admitted nor denied the allegations. It did agree to refrain from future violations of the securities laws.
Many states around the country have been unable to fully fund their public employee pension plans in the financial crisis.
"It is an area of concern," Elaine Greenberg, chief of the SEC's municipal securities and public pensions unit, said in a telephone interview. "We want to make sure that states and municipalities are adequately disclosing" their pension fund liabilities, she said.
In a news release, the New Jersey attorney general's office and the Treasury Department said state officials cooperated with the inquiry. The state noted in the release that it responded to the situation by hiring outside lawyers in 2007 to advise the state on disclosure obligations and adopting new formal disclosure procedures.
No financial penalty was levied against the state. The SEC said it took into account state authorities' cooperation in its investigation and the action taken by the state to correct the situation.
New Jersey sold more than $26 billion in municipal bonds between 2001 and 2007 to raise money for economic development projects, such as roads and public works, the SEC said. But the bond sale documents didn't disclose that the state had failed to meet its financial obligations to two state employee pension funds. New Jersey likely couldn't contribute to the pension funds without raising taxes or cutting services, the SEC said.
As a result, investors in New Jersey's bonds lacked sufficient information to assess the state's financial status, the SEC said.
Story continues below
"All issuers of municipal securities, including states, are obligated to provide investors with the information necessary to evaluate material risks," Robert Khuzami, the SEC's enforcement director, said in a statement.
Since the start of the SEC's inquiry in April 2007, no rating agencies have downgraded New Jersey's credit rating "and the state has continued to make all required debt-service payments on the bonds," the state said in its release.
A spokesman for the state Treasury Department said repayment of bonds was never at risk. "The state of New Jersey has never failed to pay its bondholders," said the spokesman, Andy Pratt.
While New Jersey's bond rating hasn't been downgraded, Moody's Investors Service last year lowered the state's outlook â a step that could lead toward downgrading the rating, which would make it harder to borrow money. Gov. Chris Christie has said he took office of a state with an even worse financial crisis than previously believed.
Christie, a Republican, has promised he wouldn't raise taxes to balance the budget. He signed legislation last month capping local spending and property-tax growth at 2 percent a year. New Jersey's property taxes are considered to be at the highest rate in the country, nearly $7,300 annually for the average household.
The nation's $2.7 trillion muni bond market is used to finance schools, roads and hospitals around the country. Retail investors increasingly participate in the market, seeking safe investments with reliable returns.
The SEC last year proposed requiring brokers in municipal bonds to make fuller and more timely disclosures to investors.
Also last year, the agency reached a settlement with JPMorgan Chase & Co. in which the Wall Street bank agreed to pay $75 million in civil fines and forfeit $647 million in fees to resolve charges that it made unlawful payments to friends of public officials to win municipal bond business in Jefferson County, Ala. The scandal roiled Alabama's most populous county and brought the federal bribery conviction and ouster of Birmingham's mayor.
__
AP Business Writer David Pitt in Des Moines contributed to this report.