The Securities and Exchange Commission ruled last Tuesday that the city of San Diego defrauded investors by not disclosing the massive, intentional underfunding of its employee pension and health care plans in connection with the offer and sale in 2002 and 2003 of more than $260 million in five separate municipal bond offerings, according to the City Attorney’s Office.

The SEC also found that the city did not report the pension and health care plan underfunding in “continuing disclosure” documents related to $2.29 billion in outstanding bonds for the purpose of updating investors on the state of the city’s finances.

Echoing what we’ve already heard from City Attorney Mike Aguirre and the Kroll report released in August, city officials were said to have deliberately concealed damaging information from bond investors and “knew or [were] reckless in not knowing that its disclosures were materially misleading” in committing securities fraud.

Approved unanimously in closed session, the city has agreed to cease and desist violating securities laws in the future issuance of municipal bonds and will retain an independent consultant to monitor compliance with its disclosure obligations, ending the SEC’s investigation into the city. The SEC will still be able to pursue individuals who may have committed wrongdoings in connection with the city’s financial disclosures.

Councilmember Donna Frye recently told the San Diego Union-Tribune that there’s a moral the city can take away from the commission’s action. “Tell the truth all the time. Full disclosure,” she said. “Open up your kimono and show the world everything you’ve got – all the ugly scars and whatever there happens to be.”

We couldn’t agree more, Donna, and the City Council needs to take that piece of advice. Disrobe and show the city your dirty little secrets.

Our disappointment lies with the entire council, but more specifically with Frye and Councilmember Toni Atkins for negotiating with the SEC behind closed doors – so much for their commitment to open government. Don’t tell us that the investigation prohibits any of you “Negligent Five” from objecting to the people’s right to know. Walk out as you have in the past and champion the city’s responsibility to inform the public about who is responsible for the egregious mistakes now plaguing our city. There is no such thing as convenient open government. It either is or it isn’t.

The people hire and fire elected officials. How can such prudent information be withheld when these politicians – forget public servants – may come across our ballot in the future? As of last Tuesday, all we know is that “certain elected officials” are responsible. Who is the SEC referring to: Council President Scott Peters, our own representative Atkins, former Mayor Dick Murphy?

The “I was given a lot of bad advice” excuse is classic pass the buck. This council bankrupted the city and then tried to conceal its mistakes from the public, period. Aguirre called it from the get-go, the Kroll report laid it out and now the SEC has confirmed it. If you didn’t know committing securities fraud was bad advice, maybe you shouldn’t be serving on the council.

And this goes back to MP 1. If former councilmembers serving in 1996, when the city first voted to underfund the pension system, created this “inherited culture of corruption,” then those former councilmembers, many of whom are now serving as elected officials elsewhere, need to be named.

We’re only beginning to feel the effects of a city crippled by a $1.7 billion deficit. It’s no coincidence that crime in District 3 has skyrocketed while the city loses experienced police officers to municipalities able to pay competitive wages. The city’s lean budget can no longer support public safety for its citizens, and the recent 40-plus attacks in Hillcrest and North Park alone are proof.