California city could face SEC lawsuit

Reuters reports:

In a case that illustrates the mounting risks facing cash-strapped California cities and their lenders, the desert city of Victorville is bracing for possible litigation amid allegations that it improperly shifted funds among different city-controlled entities.

The Victorville city council was told by its attorney last week that it faced "significant exposure to litigation" relating to a little-publicized Securities and Exchange Commission investigation into its financial practices, the city attorney acknowledged in a statement to Reuters.

City attorney Andre de Bortnowsky denied that Victorville had violated any laws, and said "it almost appears as if the SEC is on a fishing expedition."

The exact focus of the SEC investigation is not known. The SEC declined to comment.

In late June, a civil grand jury report alleged that Victorville may have violated state laws by transferring property taxes dedicated to its sanitation department to its general fund budget. Civil grand juries are investigative bodies that are not empowered to bring charges.

Will the SEC go after underfunded pension plans as frauds???