Federal securities regulators have sanctioned the Colorado Department of Transportation for failing to provide five years’ worth of state financial reports to investors in one of its largest-ever bond issues.
The sanction issued last week by the U.S. Securities and Exchange Commission says the state did not file annual reports from 2006 through 2010 to buyers of $534 million in state transportation bonds issued in 2002 and 2004, which in part funded the giant T-Rex road project along Interstate 25.
The department in 2011 said in an effort to refinance about $105 million from those original bonds that it had complied with all the reporting requirements, which included the filing of the annual reports. Those refinanced bonds mature in 2017.
Colorado self-reported the misstatements to the SEC in November 2014 after Treasurer Walker Stapleton’s office uncovered them during a massive review of statewide financial obligations tied to a new debt-management process.
The SEC gave Colorado six months to establish a policy to ensure the problems do not recur, and to bring all reporting obligations up to date. Additionally, the state must divulge the settlement in any future bond issues for the next five years, according to the order. The sanction should not have any material impact on the state’s ability to seek additional bond issues.
State officials said the problem was merely an oversight of responsibility for ensuring the reports were filed with the SEC each year. And though the SEC did not catch the problem, nor did any bond investor complain of it, the agency said a sanction was in order.
All state financial obligations issued by any agency are now overseen by Stapleton’s office, to ensure requirements are met and the state’s credit rating is unimpacted by these types of problems, spokesman Michael Fortney said.
