On Monday, Elaine C. Greenberg, chief of the new Municipal Securities and Public Pensions Unit of the SEC, stated that investors are seeking to profit from the financial strains of states and municipalities. Specifically, Greenberg said it is now possible to buy credit default swaps to effectively “short” the state of California’s ability to meet its debt obligations, according to Pensions & Investments. Greenberg said there is a question “whether that raises other policy concerns, but that product does exist.”
Pensions & Investments also reports that Greenberg said the new unit will investigate cases where public pension funds are victims of investment fraud or cases in which public pension funds violate federal securities laws, including pay-to-play and public corruption violations. The unit also will investigate pension fund failures to disclose conflicts of interest to their clients.
