Amadeusz Juskowiak

Sec staff advises fraud charges against wppss

The staff of the federal Securities and Exchange Commission SEC plans to recommend that the Washington Public Power Supply System WPPSS be charged with securities fraud in connection with its July 1983 default on 225 billion dlrs of bonds a WPPSS official told Reuters

WPPSS attorney Ron English said the system was advised by SEC staff attorneys that the five SEC commissioners would be asked to charge WPPSS in connection with its official statements about its plans to build its No 3 and No 4 nuclear power plants in the Pacific Northwest at the time it was selling the bonds

English in a telephone interview said the SEC staff planned to allege that WPPSS had overstated the demand for power in the region and had understated the cost of the plants which were to built with the bonds proceeds

English denied the allegations He said WPPSS had made no public forecasts of power demand in connection with the bond sale and had never understated the cost of the plants

We at all times told the public everything we knew about the costs he said

English said WPPSS had no indication when the SEC might meet on the staffs recommendations

The SEC as a matter of policy never comments on its enforcement activities

The SECs WPPSS investigation began in late 1983 and the agencys slow pace on the probe has been publicly criticized on several occasions since then by Rep John Dingell the Michigan Democrat who chairs the House panel responsible for the SECs budget and operations

Of the five nuclear plants originally envisioned by WPPSS one has been completed two remain under construction and two othersthose for which the defaulted bonds were sold have been terminated