The Securities and Exchange Commission has issued a report warning public pension funds that they risk violating the anti-fraud provisions of the federal securities laws if they do not have adequate compliance policies in place to prevent wrongdoing.

The SEC report stems from an insider trading inquiry into stock purchases by the Retirement Systems of Alabama, a state pension fund that purchased shares of Liberty Corp. after Raycom Media asked it to provide financing so it could acquire Liberty. When the information became public, the value of RSA's Liberty shares increased by more than $700,000.

Once the SEC began an inquiry, RSA took remedial action, including adopting a compliance program and compensating the sellers of RSA stock that it had purchased. RSA and its CEO cooperated in the SEC investigation.

"While public pension funds are exempt from most of the federal securities laws governing other money managers, they are not exempt from important anti-fraud provisions that prohibit insider trading and other manipulative and dishonest behavior that threatens the integrity of our markets," said SEC Chairman Christopher Cox (pictured) in a statement. "It is vitally important, therefore, that they have appropriate policies and procedures."

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