Tag Archive: sec

Sirota: Chris Christie’s Political Team Was In Direct Contact With Pension Overseer During Campaign

Chris Christie Official PortraitGov. Chris Christie, who made even public safety on a bridge subject to political payback, who is now running NJ policy for the benefit of his coming White House run, appears to have been less than truthful when he promised a firewall between his management of $80 billion in pension funds and his own political operation. Christie’s already under investigation by the Securities and Exchange Commission for possible securities law violations in diverting Port Authority funds to Pulaski Skyway. But the SEC also is responsible for enforcing pay-to-play law. And there, Christie may have more problems. David Sirota says he has documents to back that up.

From Sirota’s piece, at International Business Times:

The head of a New Jersey board that determines how the state invests its pension money was in direct contact with top political and campaign fundraising aides for Gov. Chris Christie as the governor last fall mounted a successful bid for a second term.

The meetings between Christie’s political team and the state’s pension overseer challenge assurances from the governor that the investment of state pension funds has been fully insulated from the political process. The meetings occurred as Christie’s campaign benefited from contributions from executives at financial firms that have secured lucrative contracts to manage growing slices of New Jersey pension money.

David Samson works late, makes calls.

From David Samson’s call log, after hours on the first day of the Bridgegate lane closures.

David Samson phone log Bridgegate

David Samson, as a former NJ Attorney General was once the chief law enforcement officer in the state. And at nearly 75 is a trusted elder in Christie’s innermost circle. Close enough, that Christie brought Samson to celebrate with him when he was installed as RGA chair in Arizona last year.  

Thank You Mr. Garrett for Not Voting

Cross posted at http://retiregarrett.com/

Yesterday Republican Members of the House Financial Services Committee voted to reject an amendment which called for fully meeting the President’s funding request for the Securities and Exchange Commission.  Twenty-five Republicans voted against the amendment and seventeen Democrats voted in favor of it.   The amendment would have been budget neutral because the SEC’s funding is offset not by taxpayers, but through a small fee on securities transactions.

What you must know even if you’re only paying partial attention is that Scott Garrett is a member of this committee.    Mr. Garrett brings up his membership on this committee as a plus for the district.  He says he’s there to watch out for us.

SEC charges and why politics matters

On Wednesday, the Securities and Exchange Commission (S.E.C.) charged New Jersey with improperly funding the state’s public pension fund.  While the acknowledgment of the commission’s cease and desist order satisfies the official accusation, one is reminded of why, despite widespread apathy, politics still matters.

In 2001, at the behest of Republican Acting Governor Donald DiFrancesco, the Legislature voted to increase teacher retirement benefits by 9%.  The bills proponents believed that the jump would attract a new generation of talent to the state.  There was also an off the record assumption that the increase boded well for a Republican leadership about to exit to the wings of power.  Not to be outdone, many Democrats shared that assessment.  The legislation passed in a bipartisan vote and DiFrancesco obliged, a decision that dramatically altered the state’s financial fortunes.  And what’s worse, it was enacted with inaccurate information.

The stock market was doing quite well in 1999.  They grabbed hold of a phantom revenue source for the increase – a $5.3 billion jump not reflected in actuarial reports.  Using that unreported sum as the basis for the law’s financing was improper: the gain

And it could have been avoided.

SEC accuses New Jersey of Fraud

The SEC has accused New Jersey of fraud related to the pensions:

The Securities and Exchange Commission today charged the State of New Jersey with securities fraud for misrepresenting and failing to disclose to investors in billions of dollars worth of municipal bond offerings that it was underfunding the state’s two largest pension plans.

According to the SEC’s order, New Jersey offered and sold more than $26 billion worth of municipal bonds in 79 offerings between August 2001 and April 2007. The offering documents for these securities created the false impression that the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS) were being adequately funded, masking the fact that New Jersey was unable to make contributions to TPAF and PERS without raising taxes, cutting other services or otherwise affecting its budget. As a result, investors were not provided adequate information to evaluate the state’s ability to fund the pensions or assess their impact on the state’s financial condition.

New Jersey is the first state ever charged by the SEC for violations of the federal securities laws. New Jersey agreed to settle the case without admitting or denying the SEC’s findings.

That’s the SEC press release, the  NYT article is here. Needless to say, Democrats were governors most of this time period. On the other hand, Chris Christie not funding the pension at all is not going to work out much better.  

Menendez wants reforms at the SEC

Following the sentencing of Bernie Madoff Monday, Senator Menendez has called for reforms at the Securities and Exchange Commission and other financial institutions. Here’s what the Senator wants:

  • An increased enforcement budget at the SEC, which was inadequately funded during the Bush Administration
  • Senate Finance Committee hearings on ways the federal government can help innocent victims of Ponzi schemes to recoup their losses through the Securities Investor Protection Corporation (SIPC) or other means
  • Enactment of the Improved Financial and Commodity Markets Oversight and Accountability Act, legislation Senator Menendez introduced on June 25th, 2009 to strengthen the Inspectors General at five key financial regulatory agencies:  the Securities and Exchange Commission, the Federal Reserve, the Commodity Futures Trading Commission, the National Credit Union Administration, and the Pension Benefit Guarantee Corporation.  The legislation would require Presidential appointments and Senate confirmation of the Inspectors General, who are currently appointed by the heads of the agencies they are supposed to investigate.  The legislation also clarifies the subpoena powers of the Inspectors General so they can properly oversee the financial regulators and requires regulators to respond to deficiencies identified by the Inspectors General by either taking corrective action or explaining to Congress why they are not taking corrective action.
  • There will be an amazing amount of money and pressure brought to bear on any reforms of the financial industry. There are so many layers of problems to deal with, but having an effective regulatory commission to oversee the system might be a good start.

    Our very own Ponzi Scheme robs NJ Elderly

    This guy sucks:

    Attorney General Anne Milgram and Criminal Justice Director Deborah Gramiccioni announced that a Salem County investment broker was arrested this morning on money laundering and theft charges, accused of defrauding South Jersey investors out of $1.3 million through a Ponzi scheme.

    According to Director Gramiccioni, Jeffrey Joseph Southard, 44, of Pittsgrove, was arrested at his mother’s home without incident this morning on charges filed by the Division of Criminal Justice. Southard was charged with first-degree money laundering, second-degree misapplication of entrusted property, second-degree theft by deception, and second-degree securities fraud.

    The Atlantic City Press says he actually got away with $1.9 million.  Here’s more about who he targeted:

    Southard allegedly perpetrated the fraud by personally visiting his clients, many of whom were in their eighties and nineties, on a regular basis. The clients stated that they wanted a conservative investment to fund their retirements, supplement their social security and provide money to their grandchildren. Southard’s victims lived in several counties in South Jersey including Burlington, Camden, Gloucester and Salem.

    Here’s what the AG had to say:

    “Robbing the elderly of their lifesavings is a particularly heinous crime,” Milgram said. “We charge Southard with peddling a complexly bogus product, enriching his personal bankbook by exploiting victim’s trust.”

    He’s our own version of Bernard Madoff, only on a smaller scale.  I have no sympathy for someone that would target those that are the most vulnerable and least suspecting.