SEC sues New Jersey for fraud

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- The State of New Jersey agreed to settle fraud charges brought by the Securities and Exchange Commission Wednesday after it became the first U.S. state ever to be accused of violating federal securities laws.

The SEC alleged that New Jersey misled investors in municipal bond sales totaling $26 billion over a six year period ending in April 2007. The state agreed to settle the case without admitting or denying the findings.

The settlement did not involve a financial penalty. But the SEC did impose a "cease-and-desist" order against New Jersey and ordered the state to improve its financial disclosures.

According to the SEC, offering documents connected to a total of 79 bond sales created the false impression that the state could fund pension funds covering teachers and state workers. In reality, the SEC said, New Jersey could not make contributions to the pensions without raising taxes or cutting services that could impact its budget.

As such, investors were not given adequate information to gauge the state's ability to fund the pensions or assess the impact on its financial condition, according to the SEC.

"The State of New Jersey didn't give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation," Robert Khuzami, Director of the SEC's Division of Enforcement, said in a statement.

In response, New Jersey said the state has never missed a bond payment and stressed that it cooperated with the federal investigation.

"We aim to have the best disclosure of any state in the nation, and we intend to meet that goal in our bond offerings," said Andy Pratt, spokesman for the New Jersey Treasury. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,427.80 19.26 0.12%
Nasdaq 4,107.18 11.66 0.28%
S&P 500 1,867.95 3.10 0.17%
Treasuries 2.70 -0.02 -0.81%
Data as of 12:24pm ET
Company Price Change % Change
Facebook Inc 60.13 1.19 2.02%
Micron Technology In... 24.99 1.08 4.52%
Bank of America Corp... 16.08 -0.06 -0.40%
Cisco Systems Inc 23.54 0.32 1.40%
Pfizer Inc 30.58 0.33 1.09%
Data as of 12:09pm ET
Sponsors

Sections

On eve of hearing UAW says it will no longer challenge loss in organizing election at Volkswagen's only U.S. plant. More

The human toll of the 'coverage gap' can be found all too easily in Hidalgo County in Texas, one of 24 states that opted out of expanded Medicaid under Obamacare. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.