The state did reach a settlement with the SEC. This is considered to be a warning of what happens when state leaders try to keep things behind closed doors.
"Investors are looking for a reasonable tradeoff between risk and reward," Dyanne Ferk, Associate Dean of Business at UIS said.
It's clear Illinois is a risky investment. The state owes its creditors $8 billion in I.O.U.'s.
The pension system is underfunded by almost $100 billion. Federal regulators say Illinois wasn't being up front about that.
"Basically, what they said here is that people who bought Illinois bonds did not have accurate and timely information about the state's liabilities and the risks of purchasing Illinois bonds. Without full disclosure, investors in Illinois' liabilities were not aware of the risk that they were taking," Ferk said.
The SEC says Illinois wasn't letting investors know how bad the pension problem was between 2005 and 2009. After New Jersey got in trouble for the issue in 2009, Illinois started being proactive.
"Basically, the state started putting more systems in place to track and gather information about the status of the pensions," Ferk said.
This is the reason the state escaped with a settlement lacking fines or fees. It was just a warning.
"The state's actions in advance of this investigation resulted in them basically saying 'stop not telling people.' That's a double negative, but stop not telling people about the true credit worthiness of the state," Ferk said.
As part of the settlement, Illinois does not have to admit they were wrong. The governor's office is quick to point that the charges ended in 2009 before Governor Quinn took office.