The Securities and Exchange Commission (SEC) charged the State of New Jersey with securities fraud for failure to disclose information regarding the state’s two largest pension plans while offering and selling billions of dollars worth of municipal bonds.
According to the SEC statement, from 2001 to 2007 the state offered and sold over $26 billion in municipal bonds. By offering these bonds, the state masked the fact it was not able to make contributions to the Teachers' Pension and Annuity Fund (TPAF) or the Public Employees' Retirement System (PERS) without raising taxes or cutting its budget.
The State of New Jersey agreed to settle with the SEC while neither admitting nor denying the SEC’s findings. New Jersey is the first state to ever be charged by the SEC with violating federal securities laws.