Securities: San Diego Settles with SEC

The City of San Diego has settled claims by the Securities and Exchange Commission that the city committed fraud when it did not disclose to bond investors a shortfall in its pension fund. The SEC said that San Diego misled investors in municipal bond documents about the financial stability of its pension plan when it issued $260 million of debt in 2002 and 2003. San Diego neither admitted or denied the findings, but did hire an independent consultant for three years to make sure its financial disclosure complied with regulations. San Diego was not fined under the settlement.

San Diego Settles With SEC Over Securities Fraud Claims

San Diego officials are working to restore the city's fiscal credibility after problems caused federal investigations and delayed the sale of bonds for necessary sewer and water projects. The city said that the probe found 51 mistakes that led to an overstatement of assets by about $500 million. Linda Chatman Thomsen, director of the SEC's enforcement division said that the SEC's involvement was important because it "signifies our resolve to hold state and local governments accountable when they commit fraud while seeking to borrow the public's money."