CHICAGO — Illinois settled a fraud charge Monday with the Securities and Exchange Commission that it misled investors with shoddy disclosure between 2005 and 2009 about the significant financial risks posed by its pension funding system.

The SEC's two-and-a-half-year probe into the state's pension disclosure concluded Monday with the announcement of a civil charge of fraud against Illinois for violating federal securities laws in its public pension disclosures in offering statements on $2.2 billion of general obligation bonds.

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