RI treasurer says SEC probing bonds

PROVIDENCE, R.I. (AP) — Federal regulators are investigating Rhode Island’s bond offerings, adding it to the list of state and municipal governments to come under scrutiny by the Securities and Exchange Commission.

State General Treasurer Gina Raimondo said today that the SEC told her Monday that it had “opened an investigation relating to the state’s bond offerings.” She said the SEC gave her no additional details about the probe, and it had not yet requested any information from her office.

The SEC is already investigating how Illinois reports pension costs to bond investors, and looking into whether Harrisburg, Pa., provided appropriate information to bond investors. Elaine Greenberg, chief of the SEC’s municipal securities and public pensions unit, said in August that the agency wants to make sure states and municipalities are adequately disclosing their pension fund liabilities.

When the unit was established about a year ago, SEC officials said one of the primary areas it will focus on is accounting of public employee pensions and disclosure violations.

The size of a state or municipality’s unfunded pension liability can affect its bond rating, and make it more or less expensive to borrow money. A larger unfunded pension liability means more risk for investors.

It appears the SEC is stepping up its enforcement efforts amid concern among investors about the fiscal health of state governments and municipalities, said municipal bond market analyst Matt Fabian, a managing director at MMA Research.