SEC Charges Kansas With Securities Fraud
WASHINGTON (CN) - The SEC on Monday accused Kansas of securities fraud, claiming the state failed to disclose in bond offerings that its pension system was "significantly underfunded" and the unfunded pension liabilities created a risk for investors.
The cease-and-desist order came after a nationwide review of bond offerings inquiring whether municipalities were properly disclosing pension liabilities and other risks to investors, the SEC said.
New Jersey was the first state the SEC sanctioned for this, in August 2010. It brought similar charges against Illinois last year.
"Around the same time, the SEC began questioning the disclosures surrounding eight bond offerings through which Kansas raised $273 million in 2009 and 2010," the SEC said in a statement Monday. "As the SEC began its inquiry, Kansas began adopting new policies and procedures to improve disclosures about its pension liabilities. Kansas has now fully implemented those remedial actions, and has agreed to settle the SEC's charges for its prior incomplete disclosures."