NEW YORK (AP) — The Port Authority of New York and New Jersey will pay $400,000 to settle charges it misled investors by failing to disclose disputes within the agency about the legality of a scheme to use the authority's money to repair New Jersey roads, according to a settlement announced Tuesday.
The Securities and Exchange Commission says the Port Authority sold $2.3 billion worth of bonds to investors without revealing internal discussions about whether certain projects were legal to pursue. The projects included New Jersey's iconic Pulaski Skyway, which is featured in the opening of the HBO drama, "The Sopranos."
To justify spending its money to repair the skyway, port attorneys dubbed it an access road to the authority-owned Lincoln Tunnel, some eight miles away. That decision was outlined by an authority lawyer in a 2011 memo after Republican Gov. Chris Christie's appointees at the Port Authority pushed for repairing the skyway and other state-owned roads.
"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," said Andrew Calamari, director of the SEC's New York office. "Municipal bond issuers must ensure that their disclosures are complete and accurate so that investors can make fully informed decisions about whether to invest."
The Port Authority acknowledged in the settlement that it violated federal securities law, but said in a statement that no bond proceeds were ultimately used to fund the projects, so no bondholders suffered losses. The agency says it has redoubled efforts to adhere to the highest ethical standards. The Port Authority controls airports, seaports and bridge and tunnel crossings between New York and New Jersey.
The agency said that as part of the settlement, its law department will be required to certify that some proposed board actions are legally authorized and an independent monitor will assess its policies regarding disclosing legal risks in bond offerings.
"The Port Authority's settlement with the SEC will ensure that Port Authority governance is further improved," the agency said.
The SEC said that the Port Authority was the first municipal agency to admit wrongdoing in an SEC enforcement action.