The Securities and Exchange Commission will review bond-related documents that Harrisburg provides to investors.
Pennsylvania’s capital city joins a growing list of municipalities being investigated by the SEC for disclosure-related issues.
The agency initially asked Harrisburg for information in November, but allowed the city to respond in January after the 2011 budget was in place, according to Chuck Ardo, spokesman for Mayor Linda Thompson.
“They asked us for some information about what we have provided the secondary market about the city’s finances,” Ardo said. “We have responded by providing a great deal of information and are gathering more information to fulfill the request.”
Ardo declined to specify what information or documents the SEC is requesting.
Commission spokesman John Nester declined to comment.
The SEC’s request for Harrisburg’s documents was first reported in the Wall Street Journal.
Harrisburg is under the state’s distressed municipalities program, called Act 47. A group of outside professionals led by the Novak Consulting Group will present city officials with a fiscal recovery plan by mid-May for their consideration.
Harrisburg has $282 million of outstanding incinerator debt that it has not paid debt service on since June 2009. The Harrisburg Authority issued the debt and the facility has not generated enough revenue to meet principal and interest payments. The city is first guarantor of the incinerator bonds.
Harrisburg Authority executive director Michele Torres said the SEC has not contacted the agency.
Last year, the SEC formed a specialized muni and public pension fund enforcement unit. Commission officials said they have about 30 attorneys in the unit working cases throughout the country.
The precise number of SEC investigations is unknown. Bond attorneys have said several have not been disclosed publicly and the SEC has only publicly brought a few muni cases since the new enforcement unit was created. The only major case involved inaccurate pension disclosures made by New Jersey, though the state had already resolved the disclosure discrepancies by the time it settled with the commission in August.
However, media reports indicate that the SEC has made recent inquiries about relationships between Goldman Sachs & Co. and Massachusetts' Department of Treasury. The SEC has also asked for documents from Illinois, Miami, Florida’s Santa Rosa Bay Bridge Authority, Victorville, Calif., Bell, Calif., and the Metropolitan Water Reclamation District of Greater Chicago.
The New York Times recently reported that the SEC was seeking information from the California Public Employees’ Retirement System, but state officials said they were unaware of the inquiry."
