New York Republican Rep. Elise Stefanik has asked the Securities and Exchange Commission to investigate an April bond sale by Harvard University, saying the college may have withheld material information from investors about the stakes of an ongoing conflict with the Trump administration.
The letter follows Harvard's April 9 $750 million taxable borrowing that the issuer "stickered" on April 15 with supplemental information warning that federal actions could hurt the school's position.
In the
"A comparison between the April 9 prospectus and the April 15 supplemental disclosure reveals significant additions regarding the potential for adverse federal action and institutional risk," Stefanik said. "This raises the question of whether Harvard had preeminently decided to reject the White House's conditions prior to offering bonds on April 9 but failed to disclose that decision to investors," she said.
"Such a failure would represent a material omission under federal securities law. Investors were asked to analyze risk without knowing the full extent of Harvard's exposure to reputational and funding-related fallout from a conflict with the federal government."
It's the latest salvo from Republicans and the Trump administration against the prestigious school, which carries triple-A ratings and stable outlooks from Moody's Investors Service and S&P Global Ratings Agency. Its bonds, traditionally among the richest in the municipal bond market, have been
A Harvard spokesperson called Stefanik's allegations false, and disputed the timeline.
"Harvard takes seriously its disclosure obligations," the spokesperson said. "On April 9 — the date of the initial offering — Harvard could not foretell the additional, unlawful conditions outlined in the government's April 11 letter, much less the government's freezing of grants and contracts to Harvard on April 14. This is why, on April 15, Harvard issued supplemental information to bondholders to ensure they had access to timely, relevant information about how the government's latest actions could affect Harvard's finances and operations."
Goldman Sachs and Morgan Stanley ran the books on the May taxable transaction. Ropes & Gray LLP was bond counsel.
Stickering bond documents with supplemental information remains relatively uncommon in the municipal market. From an investor's perspective, the issue may warrant investigation, said Jeff Timlin, managing partner and head of municipal strategies at Sage Advisory Services.
"If there's smoke sometimes there's fire, and in this case it doesn't hurt to investigate," Timlin said. "The market itself should want to look at this because no one wants to give the perception of impropriety," he said. "It's better to investigate and say there's nothing there than sweep it under the rug."
Timlin added that the credit may be a buying opportunity due to recent cheapening. "The pricing level does lend itself to some attractive valuations and return opportunities over the intermediate term," he said.
A $1 million tranche of tax-exempt Series 2025 A-2 paper with a 5% coupon due in 2055 sold Friday for 111, down from 117.7 on its March 18 sale date.
Stefanik also asked the SEC to dig into the university's prized $53 billion endowment, warning it may be overvalued and illiquid.
"A large portion of Harvard's endowment is invested in illiquid assets, private equity, venture capital and real estate that are often overvalued," Stefanik said, adding that current "elevated interest rates and declining private market valuations" make it likely that the assets' value is "far below" stated levels. "Moreover, much of this portfolio is leveraged, compounding potential losses in a downturn," she said.
President Donald Trump Friday signaled a possible end to the dispute, posting on social media that Harvard has "acted extremely appropriately" during negotiations and that a "'mindbogglingly' HISTORIC" deal may be within reach.
