The Securities and Exchange Commission has opened an investigation into Rhode Island's bond offerings, state General Treasurer Gina Raimondo announced Thursday.
The SEC notified Raimondo's office Monday and provided no further details, nor did it request information, the treasurer said.
"It is regrettable to have inherited this situation so early in my administration before having an opportunity to fully address these issues," Raimondo said in a release. "The state needs to be able to access the bond market in the years to come on the most favorable terms possible. It is critical to present a complete picture of our finances to potential bond investors."
SEC spokesman Kevin Callahan said the agency could neither confirm nor deny the existence of an investigation.
Raimondo on Monday announced she would review the state treasury office's practices, including disclosure to institutional bond investors. Spokeswoman Joy Fox said the timing of the review was not related to the SEC inquiry, rather it was meant to be the public act of the new treasurer who was sworn into office last month. Raimondo was elected in November after her predecessor Frank Caprio stepped down to pursue an unsuccessful bid to become governor.
Rhode Island has sold $912.1 million of new-money bonds and $668.5 million of refunding bonds since 2001, according to Thomson Reuters. The state sold $144.7 million of new-money bonds last year.
The state joins a growing list of states and municipal borrowers under investigation by the SEC that includes Illinois and Harrisburg, Pa. Illinois overhauled its reporting standards on bond offering documents last month in response. New Jersey last year revamped its pension disclosure practices after the SEC filed a lawsuit against the state for failing to disclose unfunded pension liabilities. New Jersey settled the case and admitted no wrongdoing.
Rhode Island's state-administered retirement plans have a $4.7 billion unfunded liability, according to the treasurer's office. The pension fund provides benefits for state employees and police, judges, teachers, and some municipalities.The Municipal Securities Rulemaking Board is exploring state public pension laws to see if there are common types of disclosures they could encourage issuers to submit to its Electronic Municipal Market Access site, MSRB officials told reporters Monday.
