Illinois is under inquiry by the U.S. Securities and Exchange Commission over disclosure statements about the state’s pension system, said Kelly Kraft, a spokeswoman for Democratic Governor Pat Quinn.
Moody’s Investors Service cited the non-public probe, which began in September, in a statement yesterday in which it affirmed the state’s A1 debt rating and negative credit outlook. It said the SEC was looking at statements Illinois officials made about potential savings from changes in the pension system, attributing state disclosure documents.
“The SEC has stated this is not an indication of any violation,” Kraft said today in an e-mail from Springfield, the state capital. Illinois isn’t being investigated and is cooperating with the inquiry, she said. “We feel our disclosures have always been accurate and complete.”
New Jersey settled SEC claims in August it didn’t disclose to investors that it failed to put enough cash into its two biggest pension plans when it sold $26 billion of bonds from 2001 to 2007. The case is the first SEC fraud charge against a state and follows the creation of a unit last year to focus on municipal securities and pension funds.
Illinois plans to sell $3.7 billion of taxable pension bonds in the week beginning Feb. 13, according to data compiled by Bloomberg.
After the New Jersey settlement, “and prior to being contacted by the SEC,” Illinois “took proactive steps to update its disclosures, and we now feel our disclosures exceed the new, more rigorous standards,” Kraft said in her e-mail.
The inquiry “should not be construed as an adverse reflection on any entity or individual involved, nor should it be interpreted as an indication by the commission or its staff that any violations of the federal securities laws has occurred,” Kraft said, citing the SEC’s language.
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