SEC accuses New Jersey of Fraud

by: Hopeful

Wed Aug 18, 2010 at 02:44:14 PM EDT

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

by: Jason Springer

Thu Jul 02, 2009 at 03:00:00 PM EDT

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.

Our very own Ponzi Scheme robs NJ Elderly

by: Jason Springer

Fri Dec 19, 2008 at 10:30:00 AM EST

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.

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.

"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."