Snooki meet Ponzi; Ponzi meet Snooki
Legal Briefing: New Jersey Settles SEC's Pension Fund Fraud Charges, by Abigail Field, Daily Finance, August 19, 2010SEC Charges State of New Jersey for Fraudulent Municipal Bond Offerings, Press Release 2010-152, U.S. Securities and Exchange Commission, August 18, 2010
In its first ever suit against a state for securities fraud, the Securities and Exchange Commission (SEC) accused New Jersey of misrepresenting as healthy its state employee and teacher pension funds to investors when it issued $26 billion in bonds between 2001 and 2007. New Jersey didn’t have the money to cover those loans and the predictions that it shared with the public about the state’s fiscal health were wildly optimistic—and largely untrue. With a new face in the governor’s mansion, the state quickly settled the case by promising to fulfill its financial commitments and thereby avoided paying fines to the SEC. Well and good. But this is just the tip of a big iceberg. State pension funds are mostly woefully unfunded, and neither the public nor current and future retirees truly grasp the scope of impending insolvency.