The State of Illinois reached a settlement on Monday with the Securities and Exchange Commission, or SEC, over charges of securities fraud.
The SEC charges against the state stemmed from Illinois undertaking the sale of $2.2 billion in bonds between 2005 and 2009. While the bonds were being sold to investors, the state failed to disclose the amount of underfunded liability contained within the pension system.
Currently, the Illinois public-employee pension system is $96.7 billion short of promised expenditures. The underfunded program has pulled Illinois's credit rating to the lowest in the nation.
The Illinois pension system has been underfunded since 1981. In 1994, the shortfall was estimated at $20 billion. Efforts to fund the system were not enough to keep up, driving the program further into debt. These shortfalls were not disclosed to investors when bonds were sold to raise capital for the state.
The settlement with the SEC included no fines or financial penalties. The state will continue to adopt changes and reforms in accordance with best practices.
Illinois is the second state to be charged by the SEC. New Jersey was charged in 2010.
Like what you read? Join me on Facebook for more.
Comments