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Speaker Madigan on SEC fraud allegations against the state: 'There are no victims here'

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SPRINGFIELD-House Speaker Michael Madigan, a decades-long constant at the Statehouse as Illinois' pensions entered their death spiral, minimized the impact on bond investors Wednesday after federal securities regulators accused the state of misleading investors about the true calamity facing the state's pension funds.

"It's important to understand that the buyers of Illinois' debt have all been paid their interest and their principal. We have not reneged on our debt payments," Madigan told reporters when asked about this week's damning Securities and Exchange Commission report against the state.

"So there are no victims here. Nobody's lost any money," Madigan said.

On Monday, the SEC accused Illinois of breaking federal securities laws and having "misled investors" in misstating the true health of the state's depleted pension funds between 2005 and early 2009.

The finding of securities fraud didn't subject Illinois to any fines or penalties, but it amounts to another fiscal black eye for a state burdened by the worst bond rating and the worst-funded pension funds in the country.

The SEC finding, the second such action against a state, focuses on misstatements linked to $2.2 billion worth of bond offerings issued during impeached ex-Gov. Rod Blagojevich's administration. New Jersey was cited in 2010 for similar disclosure failures regarding pension underfunding in its bond offerings.

The agency didn't immediately respond Wednesday to Madigan's assertion that bond investors weren't harmed by the state's lack of disclosure.

In making his statements after an appearance at an International Brotherhood of Electrical Engineers appearance, Madigan shifted blame for the problems cited by the SEC on his old nemeses.

"It's more Rod Blagojevich and John Filan," Madigan said, referring to the impeached ex-governor and the head of his budget office. "They got what they deserve."

Filan did not immediately return a call Wednesday seeking comment to Madigan's remarks.

Contributing: Zach Buchheit

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