San Diego's Aguirre Demands More SEC Action on Pension Mess

September 4, 2007 ( - San Diego City Attorney Michael Aguirre has complained to a Congressional lawmaker that federal securities regulators haven't "confront(ed) malfeasance by local officials."

A San Diego Union-Tribune news report said Aguirre’s letter to Representative Barney Frank (D-Massachusetts) – chairman of the House Financial Services Committee – contended that purported inaction by the Securities and Exchange Commission (SEC) against the city despite a November 2006 SEC cease-and-desist order is making the city’s efforts to properly disclose its financial status harder.

While waiting for the end of the SEC investigation and the completion of its delayed financial reports, the city has been hit with punishing interest rates every time it tried to turn to the bond market for financing.

In his letter, Aguirre did not directly demand action from Frank, but accused the SEC of ignoring what he called San Diego’s “flagrant disregard for the law . . . (making) the fraud provisions of the federal securities laws all but meaningless in the municipal securities market.”

Aguirre also submitted a report to city officials Friday criticizing San Diego’s efforts to correct its financial problems, asserting that the city still is not properly funding its pension, the newspaper said.

The SEC wrapped up its nearly three-year investigation into city finances last year. It found that San Diego had made misleading statements in securities disclosures about its growing pension obligations (See    San Diego Slapped with SEC Sanctions for Bond Sale Fraud ).