In rare move, SEC charges Illinois with securities fraud The Securities and Exchange Commission charged Illinois with securities fraud, accusing the state of misleading municipal investors over pension fund obligations, the regulatory agency said Monday. An investigation determined the state failed to inform investors about the impact of problems with its pension funding schedule, the agency said. Between 2005 and 2009, Illinois sold more than $2.2 billion in municipal bonds but neglected to tell investors that pension obligations were underfunded, the agency said. "Municipal investors are no less entitled to truthful risk disclosures than other investors," said George S. Canellos, acting director of the SEC's enforcement division. Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system. The SEC said problems stemmed from the state's various "institutional failures." The state, for instance, did not have adequately trained personnel involved in the disclosure process. Beginning in 2009, the state began to correct problems. Illinois settled with the SEC over the securities fraud charge and will not face fines or other penalties. Illinois is the second state to be charged with securities violations. New Jersey in 2010 was similarly charged with misleading investors about underfunded pension plans. Recovering economy helps boost public transit use European Union bans sale of cosmetics tested on animals