For the second time in history, federal regulators have accused an American state of securities fraud, finding that Illinois misled investors about the condition of its public pension system from 2005 to 2009, the New York Times reported today. In announcing a settlement with the state yesterday, the Securities and Exchange Commission accused Illinois of claiming that it had been properly funding public workers’ retirement plans when it had not. In particular, it cited the period from 2005 to 2009, when Illinois also issued $2.2 billion in bonds. The SEC’s Municipal Securities and Public Pensions Unit, formed in 2010, first took action that year in accusing New Jersey of fraud in connection with pension disclosures that said a special reserve had been set up to pay for pension increases. "Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system," said George S. Canellos, acting director of the SEC's Division of Enforcement.
