Securities Fraud in – just guess where…

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ILLINOIS!

I know, whodathunkit.

From the Sun-Times

SPRINGFIELD-Illinois broke federal securities laws in misstating the true health of the state’s depleted pension funds when going out onto the bond market between 2005 and early 2009, the Securities and Exchange Commission announced Monday.

[…]

“Municipal investors are no less entitled to truthful risk disclosures than other investors,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement in a prepared statement.

“Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system,” Canellos said.

The municipal bond market could well be headed for a disaster.  As I noted HERE, the world for states and cities will change if the Bankruptcy Court finds in favor of giving muni bond investors a haircut and/or in favor of not forcing them to meet their pension obligations.

Printing PressThe idea that the SEC is now smacking down the State of Illinois – though unfortunately no one is going to prison – for securities fraud just has to rub salt in the wound.

If you think for even a second that the finances of the federal government are a mess (and they are), that problem is nothing compared to what’s going to happen at the local level where they don’t have the flexibility of a printing press.

About Author

Michael Becker is a long time activist and a businessman. He's been involved in the pro-life movement since 1976 and has been counseling addicts and ministering to prison inmates since 1980. Becker is a Curmudgeon. He has decades of experience as an operations executive in turnaround situations and in mortgage banking. He blogs regularly at The Right Curmudgeon, The Minority Report, Wizbang, Unified Patriots and Joe for America. He lives in Phoenix and is almost always armed.

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