SEC Charges New Jersey Over Municipal Bond Offerings

The Wall Street Journal reports:

The Securities and Exchange Commission charged the state of New Jersey with fraudulently marketing billions of dollars of municipal bonds, the SEC's first case against a state for violating securities laws.

The SEC alleged that New Jersey hid from investors in the bonds the fact that the state didn't have the cash on hand to meet its obligations under the state's two largest pension plans.

The SEC said that the offering documents for the bonds failed to tell investors that the state had acted in 2001 to expand the plans' benefits.

A much bigger fraud than Enron. This is a significant case because New Jersey isn't the only state doing this. We've been making a prediction for several years now: the SEC might be the institution that shuts down state and local government pension plans for fraud and insolvency.