Municipal Bonds? Safe or Sham?
Altoona, Pa. - It has happened again! Investors depending on municipal bonds for a secure retirement should be concerned. For the second time in three years, the Security and Exchange Commission has slapped another state with securities fraud. Recently, the SEC charged Illinois with misleading its municipal bond investors.
In a press release, the Acting Director of the SEC’s Division of Enforcement stated, “Municipal investors are no less entitled to truthful risk disclosures than other investors…Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system.”
This is not the first time that a state has been charged with securities fraud with respect to its municipal bond investors. In 2010, New Jersey had very similar charges filed. Specifically, the SEC had charged the state “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.