| July 9
July 9 The U.S. Securities and Exchange
Commission has closed its probe into Rhode Island's public
pension disclosure practices without taking any enforcement
action, the state treasurer said on Tuesday.
For more than two years, the SEC had been investigating
whether the state made adequate disclosures about its pension
finances to investors in offering documents that accompany
municipal bond sales.
The probe examined the financial statements and disclosures
made from 2007, when Frank Caprio was treasurer, until Gina
Raimondo stepped into the office in 2011. Rhode Island's
retirement system for public employees has five funds worth
about $7.7 billion altogether.
"Our pension practices are transparent, our disclosure is
accurate, and our pension system is on a firm foundation,"
Raimondo said in a statement. "Any cloud that lingered over our
pension disclosure is gone. Our public employees and retirees
should have greater peace of mind today."
While Rhode Island is off the hook, the federal securities
regulator has taken a slightly different tack in the past with
both New Jersey and Illinois over their disclosure practices.
In 2010, the SEC accused New Jersey of civil securities
fraud - the first-ever such charges against any U.S. state by
the commission - for allegedly failing to tell investors that it
had not been making full payments to its pension system.
The SEC settled the case, issuing a cease and desist order
but no penalties or fines. The state neither admitted nor denied
In March, Illinois, which has the worst-funded pension
system of any state, agreed to settle similar charges. It, too,
neither admitted nor denied the charges and was not ordered to
pay a penalty.
During her first year in office in Rhode Island, Raimondo
directed the state to hire attorneys to help update bond
disclosure statements and train staffers about compliance with
federal securities laws.
She also spearheaded the launch of an investor relations
website, where Rhode Island now posts an array of budget,
revenue and financial reports and pension information.
The SEC's investigation and updated bond documents cost
Rhode Island at least $397,500 in attorneys' fees and expenses.
Some of those costs were paid for out of bond sale proceeds,
Raimondo's office said.