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Arthur Levitt, former head of the Securities and Exchange Commission and leader of the Kroll consultants that investigated City Hall, told an audience in New York yesterday that the SEC should’ve stepped up its enforcement in San Diego.
Levitt told the New York Private Equity Conference he is frustrated the SEC never charged individual officials who were at the center of San Diego’s troubles.
Here was one of the nation’s most beautiful, wealthiest cities with a strong regional economy, and it was on the brink of bankruptcy thanks to a group of political leaders more interested in looking out for themselves in the short term than the fiscal health of their city in the long term.
And let me add that while the SEC took action against the faceless entity of the city, I am disappointed that they failed to bring a single action — or hold accountable — those individuals responsible for the San Diego pension crisis. Individuals were behind this debacle — and individuals must be held responsible.
Nov. 14 will mark the one-year anniversary of the SEC’s settlement with the city of San Diego, which required the city to hire a monitor to oversee reform of its financial reporting systems. It stopped short of issuing the municipality a fine.
But Levitt’s report signaled that individuals would face federal sanctions as well.
The eight former city officials that Kroll concluded to have recklessly or intentionally committed securities fraud have so far been left untouched by the SEC. Elected officials, including five sitting council members, acted in negligence, a potentially lesser charge of securities fraud, by approving those disclosures, Kroll opined.
Council members have denied they were ever under investigation.