The U.S. Securities and Exchange Commission (SEC) announced an agreement between the SEC and the Port Authority of New York and New Jersey, in concern to an enforcement action against the Port Authority.
The Port Authority provides regional oversight of New York’s and New Jersey’s transportation systems. The agency’s 2017 budget request was submitted in December 2016, in the amount of $7.4 billion dollars.
The Port Authority has agreed to admit wrongdoing in its offer and sale of $2.3 billion dollars worth of bonds to investors in connection to New Jersey roadway projects, despite internal communication about the “risks surrounding its ability to fund the projects.”
The SEC alleged the Port Authority represented it was legally authorized to issue the bonds, “while not disclosing significant known risks its actions were not legally permitted.”
The SEC’s action stems in part from communication between Port Authority executives and employees, in which risks associated with “a successful challenge by the bondholders and investors” were discussed within the agency.
The SEC order finds the Port Authority “violated Sections 17(a)(2) and (17)(a)(3) of the Securities Act of 1933”.
Theodore Cohen, writing for the Fordham Law Review in 1981, wrote of the need for a “reexamination of the need for a private right of action” under the section, as “actions under sections 17(a)(2) and 17(a)(3) require only a showing of negligence.”
In December 2014, Governors Andrew Cuomo (D-NY) and Chris Christie (R-NJ) joined to veto legislation aimed at creating accountability and transparency within the agency. The legislation would have required the agency consider its primary responsibility as a fiduciary one, would have addressed issues concerning the conflicts of interest of board members, and would have opened the agency to an expanded version of the open meetings law.
Currently, the agency requires notification to the public of whether meetings will be an open or closed executive session meetings.
However, following “Bridgegate” (an incident in which New Jersey government officials were found to have ordered the closing of the George Washington Bridge in retaliation against a Fort Lee, New Jersey mayor who had not provided a public endorsement of Governor Christie), the Port Authority updated its bylaws to require “the bistate agency to apply whichever of the two states’ laws is more favorable to disclosure of documents2” be implemented.
In addition to its admission of wrongdoing, the Port Authority must pay a $400,000 penalty to settle the charges.
Further Reading, Referenced Articles, and Public Resources.
The Port Authority of New York and New Jersey. 2017 Proposed Budget. Microsoft Power Point Presentation. Port Authority of New York and New Jersey, 2016. http://corpinfo.panynj.gov/files/uploads/documents/board-meeting-information/board-committee-meeting-presentations/2017_Proposed_Budget.pdf?_ga=1.169440231.715460415.1484233952.
Cohen, Theodore J. 1981. “Implication Under Section 17( A) Of The Securities Act Of 1933–The Effect of Aaron V. SEC”. Fordham Law Review 49 (6): 2-4. http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=2497&context=flr.
2 Transparency In Governance / Open Meetings Rules & Regulations. 2006. Ebook. 1st ed. New York: The Port Authority of New York & New Jersey. http://corpinfo.panynj.gov/documents/transparency-in-governance-open-meetings-rules-reg/. Editor’s Note: A 2006 copy of the Port Authority’s bylaws is presented as a feature on the ‘Corporate Information’ tab of the Port Authority’s website. Versions updated since 2006 are not featured on the Port Authority’s site.
“Press Release Article – Port Authority Of NY & NJ”. 2017. Panynj.Gov. http://www.panynj.gov/press-room/press-item.cfm?headLine_id=2619.
“Port Authority Adopts New Transparency Resolution – News – Northjersey.Com”. 2017. Northjersey.Com. http://archive.northjersey.com/news/port-authority-adopts-new-transparency-resolution-1.1089953.