SEC launches inquiry of bankrupt San Bernardino

SAN BERNARDINO, Calif. -- Federal regulators are looking into the finances of San Bernardino as the city makes its way through bankruptcy proceedings.

The U.S. Securities and Exchange Commission has launched an informal inquiry, the Los Angeles Times ( reported Wednesday. The agency, however, said the investigation doesn't necessarily mean any laws were broken.

The inquiry "should not be construed as an indication" that "any violation of the federal securities laws has occurred," the agency said in a letter to the city last week.

City Attorney James Penman said the city will cooperate. He said he wasn't told what triggered the inquiry or what the SEC plans to examine, although it probably will relate to the use of city bond funds.

He said he expected other government agencies to open similar probes.

"We think the public has the right to know why things happened, and to make sure these things don't happen again," Penman told the newspaper.

The federal housing department and California finance department already are investigating.

San Bernardino filed for bankruptcy protection in August after learning that it faced a $46 million budget shortfall. It's the third California city to seek Chapter 9 bankruptcy protection this year, along with Stockton and Mammoth Lakes.

The SEC has also monitored Stockton's bankruptcy proceedings, the newspaper reported.


Information from: Los Angeles Times,