Wilton’s allegation that Pearce ran afoul of SEC rules is factually incorrect; bond watch list is public

Wendy Wilton gives a press conference at the Statehouse. Photo by Nat Rudarakanchana
Wendy Wilton gives a press conference at the Statehouse. Photo by Nat Rudarakanchana

GOP candidate Wendy Wilton is questioning whether state treasurer Beth Pearce violated her fiduciary duty to state taxpayers to gain a political edge in the treasurer’s race.

The crux of the question is whether Pearce, by disclosing Rutland’s place on a special watch list of the Vermont Municipal Bond Bank, harmed Rutland’s financial reputation, potentially scaring investors away from Rutland’s bonds.

Wilton’s allegations about the treasurer’s conduct were based on a major factual error.

Although Wilton believes the watch list was a private document, internal to the bond bank, official sources say it’s actually a public document, readily available upon request.

Since the Vermont Municipal Bond Bank is a public body, explained the bank’s executive director Robert Giroux, its bond watch list is a public document, as are minutes of its meetings, where they add and remove towns from the list.

Sources also say that it’s unlikely that Rutland’s financial reputation would be significantly harmed by the disclosure in any case, making Wilton’s politicized remarks about the damage to Rutland seem somewhat stretched.

Giroux said Rutland’s status wouldn’t harm the city’s ability to borrow through his bond bank, wouldn’t harm any loans to Rutland and wouldn’t affect interest rates. He added that the watch list is shared with credit rating agencies, who see the list as an important positive tool for oversight.

Because the list is public, the claim that Pearce had violated her fiduciary duty seemed inapplicable.

Asked whether Rutland could be harmed by wide public knowledge of its listed status, Giroux said, “No, I don’t think that’d be the case. I don’t think investors would be turned away. … It’d have a minimal, if any, impact.”

In contrast, Wilton described public statements about Rutland’s position on the list, stemming originally from a WDEV Mark Johnson debate on Monday, “as a select disclosure, by Beth Pearce and by the governor, in such a way that it was a political gain.”

Wilton believed that such disclosure is “bound to a higher standard,” regulated by the Securities and Exchange Commission along with the Vermont Municipal Bond Bank’s own policies, and she called the disclosure “disturbing.” Pressed for details, Wilton wouldn’t say that Pearce or Shumlin had broken the law or other regulations.

Wilton hadn’t considered submitting a formal complaint to the SEC, but her campaign manager Bradford Broyles said earlier in the day that they were working with an attorney to assess whether there’d been a breach by both Pearce and Shumlin. He wouldn’t name the attorney.

Wilton’s campaign actually provided both the watch list and the bond bank minutes to reporters at a Statehouse press conference Thursday.

SEC spokeswoman Florence Harmon declined comment on the matter. Recent enforcement actions listed on the SEC’s website for municipal securities include serious financial crimes like fraudulent bidding and illegal payments to close friends of public officials.

Pearce said Wilton was the one who first discussed the watch list during Monday’s debate, by boasting of Rutland’s removal from that list. “She put that out there,” Pearce said. “That is her responsibility, and frankly, if you bring it up as an accomplishment, you have to own the fact that you’re back on the monitoring list.”

Paul Giuliani, a lawyer who specializes in public and municipal finance, said bond investors are unlikely to be scared off by the fact that Rutland is (or was) on the monitoring list.

Firstly, he said, most investors look mainly at the credit rating of the VMBB’s pooled bonds, rather than at individual city bonds or the underlying financial condition of towns or cities. Although a hypothetical investor could factor the list into his decision, Giuliani continued: “I’d be really, really hard pressed to say the mere dissemination of that fact somehow prejudices or imperils the municipality’s ability to sell bonds.”

He downplayed the importance of Rutland’s placement on the list, saying it didn’t have troubling implications for the city or indicate much about Wilton’s management abilities, echoing what Wilton told VT Digger last week.

Giuliani was a guest at the June 2012 meeting in which Rutland was placed on the list.

Wilton has said the city is on the list because of an 18 percent unfunded pension liability, which she has warned city leaders about.

In another development, Wilton laid out a timeline about how Rutland came to be on the list, suggesting that municipal bank board members were moved by political considerations in their decision.

“The timeline here: I announced that I was running for state treasurer in the middle of May,” said Wilton. “And then come June, at the next Vermont Municipal Bond Bank meeting, there’s this action: where the board, which includes several supporters of treasurer Pearce, and contributors to her campaign, makes a decision to develop this internal list, not shared with the communities affected. … The whole thing seems rather coincidental in some way.”

Board member David Coates, a supporter and donor of Pearce’s campaign, called any such insinuations “outrageous.” He said political considerations would “never enter into any decision I would make, or John Valente [board president] would make, when it comes to this. Politics is secondary, period.” Valente didn’t return requests for comment.

Coates was surprised by Wilton’s suggestions that the disclosure would cause problems. “It’s not a secret kind of thing,” he said, of listed status, and added: “I can’t imagine it’d have any impact on Rutland, myself.”

Coates said the remarks are a sign the close political battle between the two candidates is nearing an end.

The race, continued

In other news from the treasurer’s race, the Pearce campaign produced an email showing Wilton using her city email to invite city employees to her campaign launch. The Pearce campaign branded this as “entirely inappropriate.”

“Our opponent has tossed aside hardworking taxpayer dollars in Rutland by using the city account and time on their dime,” said Pearce campaign manager Ryan Emerson in a statement.

Wilton said she didn’t send any political emails from her city email, and specifically denied that she’d sent an invitation to her campaign launch. To the broader question of Wilton campaigning on Rutland city time, her campaign manager Brad Broyles responded: “All of her responsibilities are being taken care of at the city.”

VTDigger verified in May that Wilton did, indeed, send the email for her campaign launch from her city account.

Wilton said her voting record as state senator isn’t relevant to her bid for treasurer, in response to attacks from a group of Democratic senators this week.

On Thursday, the Vermont Democratic Party also distributed a 33-page packet, titled “Wilton Runs from her Record,” which compiled press releases and other reading material. On the whole, the packet makes a case that Wilton has conducted a consistently misleading campaign, fleeing from her political past when convenient.

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  • Bradford Broyles

    I refer you to the WCAX story where they post a letter from Bond Bank’s Bob Grioux clearly stating the monitoring list was “intended for internal use”. Unfortunately that important part of the story isn’t represented here. Clearly the leadership in Rutland and Barre, just two of the municipalities had no idea they were on the list. Barre Mayor and Peter Shumlin supporter states “Beth Pearce through him under the bus”. To have the list disclosed selectively, by a board member at a political debate intending to harm Wilton is suspect at best.

    For more on the story watch this link below:


    • Stuart Nickel

      Open government laws clearly state that this information is available to the public!

      It’s unfortunate that Wendy feels so threatened by these laws but no amount of political spin can change the facts.

    • Karl Riemer

      “intended for internal use” and “available to the public” are not contradictory in the least. All sorts of lists, studies and analyses are generated because they help organizations do their work. They’re all intended for internal use. That doesn’t mean they’re confidential, only that there’s no particular public value and usually no particular public interest in them. In this case, any public interest attaches to WW taking credit for Rutland being removed from the watch list without mentioning that it was subsequently returned to the same list. Her strategy seeks political advantage through half-truths, then further political advantage complaining about exposure of her deception. The question in Vermont: is she capable of candor and discretion when she’s not campaigning? because she’s certainly been fast and loose with facts while campaigning.

  • Bob Stannard

    This is two, major, factual errors in two days for the Wilton campaign.

    If accuracy matters in the role of Vermont’s State Treasurer (and one would think that might be a criteria) the choice in this election is becoming clearer each day.

  • Kelly Cummings

    Ms. Wilton is truly amazing. Seems every other word out of her mouth is transparency. This is the word she continually hides behind when making accusations about Beth Pearce. It’s pretty obvious that Ms. Wilton never seems to have any evidence to back up those accusations though. She just implies….there’s something going on and it is very important to be transparent about it. Transparency! Transparency! She has repeatedly said how important it is for her to “shine a light” on it (whatever “it” is).

    I think all this “transparent talk” is finally catching up with her. I don’t think she likes the fact that she got caught in her own trap. So she cries “FOUL!”…again. Transparency is transparency Ms. Wilton and there may not even be enough of Lenore Broughton’s and Vermonters First money to change that.

    What you thought was your Beth Pearce “Gotcha Moment” just got you. Sad really. This is what happens when you play dirty politics. Just run on your merits and may the best woman win!

  • Walter Carpenter

    “VTDigger verified in May that Wilton did, indeed, send the email for her campaign launch from her city account.”

    It sounds like Ms.Wilton is having some trouble remembering her own lack of transparency on certain things like what the digger mentioned above here. As Kelly said, “transparency is transparency…and there may not be enough of Lenore broughton’s and Vermonters First money to change that.”

  • David Dempsey

    People like Wendy Wilton scare the heck out of me. She keeps throwing bull crap at the wall hoping that some will stick. She makes Governor Shumlin look like a choir boy.