SPRINGFIELD-Illinois broke federal securities laws in misstating the true health of the state's depleted pension funds when going out onto the bond market between 2005 and early 2009, the Securities and Exchange Commission announced Monday.
The finding of securities fraud doesn't subject the state to any fines or penalties but amounts to a warning to potential investors about the state's past financial misdeeds.
The action focuses mostly on misstatements made during impeached ex-Gov. Rod Blagojevich's administration, though Gov. Pat Quinn's administration wasn't spared entirely in the federal order.
"Municipal investors are no less entitled to truthful risk disclosures than other investors," said George S. Canellos, Acting Director of the SEC's Division of Enforcement in a prepared statement.
"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," Canellos said.
A spokesman for Quinn's budget office said Illinois has "cooperated fully" with the SEC during its inquiry.
"The state neither admits nor denies the findings in the order, which carries no fines or penalties," said Abdon Pallasch, assistant budget director.
