Port authority to pay $400,000 to settle wrongdoing allegationsReprints
(Reuters) — The Port Authority of New York and New Jersey has agreed to pay $400,000 to settle allegations it failed to inform investors of risks to roadway projects, becoming the first municipal bond issuer to admit wrongdoing in an enforcement action with U.S. securities regulators.
The Securities and Exchange Commission's probe is part of a sprawling web of investigations that began following the so-called Bridgegate controversy, the politically motivated closure of several lanes at the George Washington Bridge in 2013.
Reuters was first to report in April that the bi-state agency, which underwent governance changes following intense scrutiny in the fallout of the scandal, was in talks with the SEC.
The agency operates airports, bridges and tunnels in the region, which produces at least 10% of the nation's economic output, according to the U.S. Census Bureau.
According to the SEC, the authority held internal discussions about whether certain projects, including New Jersey's Pulaski Skyway, were outside its mandate and might not be legal.
Internal memos noted that there was "no clear path to legislative authority" for such projects and identified "the risk of a successful challenge by the bondholders" in connection with the funding, the SEC said in a statement.
Even so, the Port Authority sold $2.3 billion of bonds without disclosing the risks around its ability to fund the projects.
The SEC's investigation is ongoing, its statement said.
The probe includes an examination of the cancellation of the Access to the Region's Core project in 2010 by New Jersey Governor Chris Christie because of concerns about cost overruns. The project would have created a much-needed new commuter rail tunnel under the Hudson River.