The Port Authority ofNew York and New Jersey infringed the laws of the federal security when it borrowed funds for repairing the roads and a bridge in New Jersey, which its attorneys supposed were beyond its limits.
They have now agreed to pay a penalty of $400,000 to the U.S. Securities and Exchange Commission(SEC)for settling claims that itillegally raised 2.3 million dollars as bonded revenue in order to pay for the non-authorized transport projects in New Jersey.
On Tuesday, the SEC announced this settlement deal. The commission, which regulates sales of bonds and stocks, told that the Port Authority had acknowledged to offence in this case, making it the first municipal bonds issuer to do so.
SEC New York regional office’s director Andrew Calamari said – “The Port Authority represented to investors that it was authorized to issue bonds while not disclosing significant known risks that its actions were not legally permitted.” He went on to add that the Port Authority was the first municipal bonds issuer to acknowledge offence in the enforcement action by the SEC.
Though, Port Authority’s Chairman John J. Degnan retorted that the agency had not acknowledge to deliberate offence, but only to negligence in revealing all the risks faced by its bond buyers. Referring to the SEC’s settlement announcement, he said – “I was shocked when I saw the release.”
According to the SEC, the Port Authority had sold 2.3 billion dollars’ worth bonds to the investors without disclosing internal conferences about whether specific projects like Pulaski Skyway could be pursued legally.
However, the Port Authority said that bondholders did not suffer any losses as bond proceeds were not used for funding the projects. It has doubled its efforts to follow the highest ethical criteria, according to the agency
The Port Authority is responsible for controlling seaports, airports, and tunnel and bridge crossing between New Jersey and New York.
The Port Authority has disclosed that it has been showing cooperation to the SEC’s decision and that investors had not lost any money.
According to Port Authority, it has “made significant governance reforms since March 2011 to ensure that there will be no recurrence of the ‘negligence’ found by the SEC and views its $400,000 payment as modest compared to the cost of litigation.”
Neither the investors nor the Port Authority commissioners were notified of the internal discussion over the legitimacy of using Port Authority funds for the road projects, said the security commission. During 2012 – 2014, the Port Authority had managed to raise 116 million dollars through sales of bonds and the proceeds of this were planned for the road projects.