The Securities and Exchange Commission wrote last week to city of San Diego representatives seeking an update on the city’s progress in reforming its accounting structure.
In the July 23 letter, SEC official Kelly Bowers states that, given time limitations and the complex nature of San Diego’s issues, the report to the SEC from the city’s independent monitor contained few recommendations and no deadlines.
Bowers asks the city for updates on the few recommendations contained in Keller’s report, including the hiring of an internal auditor. CFO Jay Goldstone reported today at the Audit Committee hearing that the city recently interviewed seven candidates, two of whom are considered “very strong” candidates, and one of whom is considered “strong.” The next step: Interviewing with the Audit Committee members.
“I think from the letter the SEC is as much concerned about the future as it is the past,” City Attorney Mike Aguirre said today.
He added, “We have a limited time I think before we’re going to see some criticisms from the SEC.”
The city and SEC reached a settlement in November that said the city had committed securities fraud in failing to disclose the size of its pension and retiree health deficits to potential investors.
Stanley Keller is the securities attorney serving as the independent monitor mandated by the SEC settlement. He said he plans on looking closely at the issues identified by Aguirre.
“What the (SEC) letter does is identify several recommendations that were in my initial report and ask the city to respond what actions it’s taking to respond to those issues,” Keller said.
“I think it’s important for the city to respond promptly,” he said.
Aguirre also said the SEC case is still open and attorneys for city officials have submitted legal bills for ongoing negotiations with the SEC. Though, Aguirre said he wasn’t suggesting that those city officials were City Council members.