SEC Complaint Filed Against SJ Mayor

Unions file SEC complaint regarding pension projections

By Jenna Susko and Julie Putnam
|  Friday, Apr 27, 2012  |  Updated 6:59 AM PDT
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SEC Complaint Filed Against SJ Mayor

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More pension pandemonium today in the City of San Jose following an NBC Bay Area Investigation into questionable retirement projections.

Another complaint has been filed this afternoon against the Mayor of San Jose, Chuck Reed.

This one is with the Securities and Exchange Commission (SEC) in San Francisco.

An attorney representing several unions says in the SEC complaint, that city officials, including the Mayor, did not reveal to potential investors that retirement costs could reach $650 million by fiscal year 2015-2016.

The complaint alleges this failure to disclose occurred while the city was seeking multi-million dollar bonds for the airport and convention center and that a $650 million dollar projection in future retirement costs would jeopardize the city's ability to pay back it's investors.

The complaint cites multiple occasions in which the mayor publicly used the figure $650 million as the five-year pension projection and questions why this "material fact" was not presented to potential investors.

It also claims not disclosing that information is against federal securities law.

This follows an ethics complaint filed two weeks ago alleging the mayor and other city officials misrepresented future retirement costs.

The Mayor's office issued this statement in response to the complaint: 

"This is another bogus complaint full of misrepresentations, which was filed by the union lawyers as a political trick to distract the voters from the fact that our city’s retirement costs have tripled in the last decade to $245 million per year – forcing us to eliminate 2000 jobs, lay off police officers and fire fighters, and lock up libraries. Our extensive bond disclosure documents clearly identify our pension plans’ billions of dollars in unfunded liabilities, the hundreds of millions of dollars in annual retirement costs incurred, and the potential for significant cost increases if actuarial assumptions are changed. The documents also have numerous references to fiscal emergency, our fiscal reform plan and the many public documents that describe the scope of problems we are facing as pension costs escalate."

Do you have more on this story or something else we should investigate?  Contact: TheUnit@NBCBayArea.com

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