Monday, August 11, 2014

SEC files securities fraud charges against state of Kansas over muni bonds and pension liabilities

CNBC reports:
The U.S. Securities and Exchange Commission said on Monday it has charged Kansas with fraud for not properly disclosing funding problems with its public pension when it held bond offerings in 2009 and 2010.

It marks the third time the federal regulator has taken action against a state for violating municipal bond disclosure rules.

Kansas, which was under investigation for four years, has already implemented reforms in how it discloses its pension liabilities and has agreed to settle the charges for its prior incomplete disclosures, without admitting or denying the charges, the SEC said.

According to the SEC, the Kansas pension system was so poorly funded that it created a repayment risk for investors holding the state's bonds, but in bond offering documents the state did not explain the existence of "the significant unfunded liability.''
No word yet from Dick Durbin and other Illinois politicians on this story. After all, Illinois politicians are experts in underfunded pensions.