Illinois Settles SEC Fraud Charge Over Pensions
The federal government is charging Illinois with securities fraud, claiming it misled investors about the health of its pension system.
Gov. Pat Quinn's office said Monday that the state has agreed to settle the Securities and Exchange Commission case. Assistant budget director Abdon Pallasch says the state is promising better financial disclosures but admitted no wrongdoing.
The case revolved around more than $2 billion of municipal bonds sold from 2005 to early 2009 to pay state obligations to public-employee pension programs.
The SEC charged that the state did not adequately inform investors that a 50-year funding plan adopted in 1995 did not adequately cover pension liabilities.
Illinois House Republican Leader Tom Cross said he hopes the SEC investigation won't hurt Illinois' chances when it tries to borrow in the future.
"It's a shame, it's I think a real problem, once again image-wise, for the state of Illinois," he said.
The five pensions systems are now $97 billion in debt and a solution is lawmakers' top priority.