this is the first sec enforcement against the state. the rest has been against cities, counties, other government issuers. this one was for negligence. the mere negligence was sufficient to bring action against the state of new jersey. slide 24 is the one i want to highlight. it is a very interesting statement by the sec and the strongest statement that have made about what they view, as far as written controls and training. what they said was the state was aware of the underfunding of pensions but due to a lack of procedures, the state made material misrepresentations. the sec, for the first time saying, the failure to have written controls, the failure to have training, was actually the cause of misleading disclosure. the sec, as we discussed, does not have direct jurisdiction over issuers. they are seeking it. they are using enforcement actions to make the strongest statement they care about what they think should be imposed upon you. once again, britain controls and disclosure training. -- written controls and disclosure training. w

this allowed the sec to bring in action on negligence. with that being the type of enforcement action, who are the possible defendants? the sec can bring in action against a governmental issue or as the entity. they can bring an action against government officials and employees. they can bring in action against employees. the sec has on its web site and complete compendium of all of the cases that they have brought in the index. to date, there has been no action as the body. this is the only advice by which they directly speak to your responsibility. before i go into the orange county report under which we're operating here. let me focus on slide 12th. this is important. there are these various context that we discussed and there is potential liability for the city, whether it is official statements, continuing disclosure filings, this broad concept of any communication to reach investors, they are all establishing liability for the city as the city. so far, the only advice that we have about your potential liability is dealing with offici

the sec referred to this as the elephant in the room. the argument was that the staff knew, the city councilman that there had been these various pension negotiations and the payments would grow significantly and they could be high enough that they would impact the service but there was never proper disclosure, never proper discussion of it. why was the material? the allocation was under sending its puncheons

to increased regulation by the sec and that more is certain to follow. to that end, staff, the city attorney's office, and outside disclosure council have established a process to assure the representation and the statements and the bishops' statement is accurate and not misleading. fair or not, the fcc reviews the boards as the final and responsible gatekeepers, so with that, we will go to slide one. the following presentation, we will address the applicable securities law. what is the law here? next, we will look at what the board will approve when it authorized the issuance of bonds, and finally, we will provide guidance to the board in terms of discharging, steps you can take to discharge or legal responsibilities -- your legal responsibilities. we will answer a question you are all going to ask and give you guidelines to get comfortable with that question. sean will not taking to the first part of a presentation which is about the applicable law here. thank you. president nolan: good afternoon, mr. tierney. >> thank you. i will go back to the documen

observation one -- the sec and investors have exquisite 20/20 hindsight. that means that that fact that you -- well, we do not need to talk about that, that will be the key thing that a claim is made that should have been disclosed. we want to disclose everything without, obviously, burdening somebody in a blizzard of information. then, our decision point on whether to disclose or not to disclose -- well, look at observation one. remember, the sec can impose civil penalties and make recommendations to the doj. i did not mean to overemphasize that, but i do not mean to minimize it, either. my experience in san diego tells me that decent people that were trying to do the wrong thing had their careers ended by simply a lack of attention. i have been trying to carry that message here, and we will see how it goes. in any event, this is the official statement. material information is what we will include. the investor is the centerpiece of this. we will tell our story. we will tell a story about what we are financing, risk factors associated with that. obviously,

carries out enforcement actions -- the sec carries out enforcement actions. unreasonable basis, where they take you to court, an issuer or other participants come to court for a civil charge. and on the criminal bases, where they bring in the department of justice. then it is also possible for others to bring causes of action. if they feel they have been harmed by buying the bonds, they can also bring claim. ok, so, who are the enforcement actions against? basically, they have touched on everyone who has been involved in the bond issue. you know, the issue were -- the issuer, the individual board members, government officials and employees and all the third party professionals. they have all had charges and been written about in the reports and chastised and so on and so forth. to this date, no individual board members have been held liable. the orange county board did approve a settlement, and it was speculated that in san diego, there might be action against individual board members, but to date, no individual board members. very few public officials have be

the sec has used this to make sure they you provide reports to the market. cash in addition to contractually, you can voluntarily make disclosure to the marketplace. the third context in addition to the official statements and the continuing disclosure i men's that you make, the sec has a broad concept that any statement that reasonably expected to reach investors is possibly subject to anti-fraud liability. here is the way it was phrased. a municipal issuer when it releases information to the public, it is reasonably expected to reach investors. those disclosures are subject to the anti-fraud provisions. the fact that they are not published does not alter the mandate or violated the anti- fraud descriptions. what this means is that the investor information on the website was press releases from the mayor's office. all of those could be considered a reasonable investors. in addition to those being the three context, one of the standards that applies to these disclosures. once again, even though your securities are exempt from registration, the anti-fraud pro

historically at the sec. there are lessons they think what they are really asking us is to take a look at the way you actually conducts cost-benefit analysis. they take away from a lot of the recent decisions in my opinion is we need to buy at a more wholesome discussion about the various alternatives that are on the table of wholesome cost-benefit analysis around the proposed rule, but also run viable alternatives to the rule. part of that will be to provide a complete discussion, not only at the cost of benefits we are able to quantify, but the qualitative cost of benefits. that is really one of the roads in trying to analyze cost-benefit analysis is that so many of the benefits that are associated with the particular rules simply don't lend themselves to ready quantification. it's really not feasible in a lot of situations. i think the other take away from the privacy access decision his father is currently the typical part this is to involve the phd economist at the sec in very early stages of the rulemaki

historically at the sec. there are lessons they think what they are really asking us is to take a look at the way you actually conducts cost-benefit analysis. they take away from a lot of the recent decisions in my opinion is we need to buy at a more wholesome discussion about the various alternatives that are on the table of wholesome cost-benefit analysis around the proposed rule, but also run viable alternatives to the rule. part of that will be to provide a complete discussion, not only at the cost of benefits we are able to quantify, but the qualitative cost of benefits. that is really one of the roads in trying to analyze cost-benefit analysis is that so many of the benefits that are associated with the particular rules simply don't lend themselves to ready quantification. it's really not feasible in a lot of situations. i think the other take away from the privacy access decision his father is currently the typical part this is to involve the phd economist at the sec in very early stages of the rulemaki

congress's tried to focus on improving the sec as well. the wall street reform and consumer protection act was mandated that the sec in dazed and independent consultants to examine internal operations, structure, and need for reform which identify several opportunities including reed prioritizing activities, reshaping the agency to maximize efficiency, and effectiveness investing to improve infrastructure and engagement with self-regulatory organizations. the report also notes the considerable additional responsibility placed on the sec after the financial crisis and a gap in funding that cannot be overcome by improving efficiency . congress must fully fund the sec if it is to effectively discharge and mandate and police the markets and protect investors. the sec has been validly criticized for suspicions in the past. today's hearing will focus on how the sec management has responded to this criticism and the need for reform. the securities markets need to invest in companies to come the other and allocate capital officially and productivel

we have done exactly what the sec has asked us to do. we cannot guarantee that that will assure there will be no mistakes. what we can do is assure you it that we have done the best we can to defend you. were there to be some problem, you have a strong defense that you were not reckless, you were not deceitful, you did exactly what the sec asked you to do. with my 30 minutes, i have used 25. i normally take 90. i have curtailed this significantly to. what we did was, we have -- there are hundreds of sec enforcement cases. what i would frequently do is go through a number of the key thing -- the key cases that affect issuers. for this presentation, we cut for that. you do not want to know all of those facts. what you want to know is our collective judgment as to how to proceed. we did highlight the one that speaks to you directly, the orange county report, and we took that into account. i would be happy to answer any questions about the procedures, the cases, anything else dealing with disclosure. president chiu: any questions? ok. thank y

the sec is looking to get an injunction. they're also trying to reclaim money for the alleged victims and they will ask the court for penalties and fines, which could be in the millions. >>> pricey protest. the outcome pie d.c. movement has cost taxpayers nearly $900,000 so far. that is according to records obtained by wtop. the mayor's office says the cost includes overtime for police and sanitation workers. this week's key bridge protest racked up more than $4,000 for traffic control. meanwhile, outcome pie d.c. teamed up with anny gipt solidarity march. activists are protesting giving public money to the egyptian military. the group claims the united states gave egypt more than $1 billion in military aid last year alone. >>> another member of gadhafi's family has been captured by revolutionary fighters. this time it is one of his sons. he now faces the possibility of going on trial before either an international or libyan court to be held accountable for his father's alleged crimes. he was once a voice of reform but became