Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, March 6, 2008

SEC Warns Public Pension Plans about Compliance

The SEC issued a press release reminding public pension funds of their responsibilities under the federal securities laws and the importance of adequate compliance policies and procedures to prevent wrongdoing in their money management functions.  The SEC's Report of Investigation stems from an insider trading inquiry into stock purchases by The Retirement Systems of Alabama (RSA), a state pension fund. RSA purchased shares of The Liberty Corporation while in possession of material, non-public information about the prospective acquisition of Liberty which it learned about because it was to provide financing for the acquisition. RSA did not have any program, policy, practice, or training to ensure that its investment staff understood and complied with the federal securities laws in general, or insider trading laws in particular. When the information became public, the value of RSA's Liberty shares increased by more than $700,000.

The SEC resolved the dispute with a report instead of other sanctions, at least in part because of RSA's remedial actions and cooperation in the investigation.

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