Today, House Republican Leadership Chairwoman Elise Stefanik sent a letter to U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins, urging an investigation into Harvard University’s recent bond offerings. Congresswoman Stefanik expressed concerns that Harvard may have withheld material information from bondholders before its initial offering.
In her letter, Chairwoman Stefanik stated, “I write to raise concerns regarding Harvard University’s recent financial disclosures in connection with its taxable bond offerings, particularly its compliance with disclosure requirements under SEC rules. There is reason to believe Harvard withheld material information from bondholders, including a decision to reject White House conditions related to a civil rights investigation prior to its initial offering and only disclosed that fact days later in a supplemental filing.”
Stefanik further elaborated on the potential risks associated with Harvard’s financial position: “Despite Harvard’s reputation for fiscal strength and its reported $53 billion endowment, the institution’s underlying financial position may be more precarious than publicly acknowledged. A large portion of Harvard’s endowment is invested in illiquid assets, private equity, venture capital, and real estate that are often overvalued due to reliance on internal estimates and outdated transaction data. In today’s environment of elevated interest rates and declining private market valuations, the real, realizable value of these assets is likely far below stated values. Moreover, much of this portfolio is leveraged, compounding potential losses in a downturn.”
The congresswoman also raised questions about Harvard’s recent borrowing activities: “Harvard’s recent borrowing spree over $1.2 billion in taxable bonds in just the past two months raises questions about its short and medium term liquidity. These borrowings come on top of Harvard’s $7.9 billion in existing debt. Public bond documents cite uncertainty around federal research funding and potential changes in cost recovery as material risks. However, the sequencing of events surrounding the bond offering raises concerns.”
Stefanik highlighted discrepancies between two key documents: “I believe the supplemental disclosure issued on April 15 contains material information that should have been included in the original April 9 bond offering. A comparison between the April 9 prospectus and the April 15 supplemental disclosure reveals significant additions regarding the potential for adverse federal action and institutional risk. This raises the question of whether Harvard had preeminently decided to reject the White House’s conditions prior to offering bonds on April 9 but failed to disclose that decision to investors.”
She added that such an omission could be significant under federal securities law: “Such a failure would represent a material omission under federal securities law. Investors were asked to analyze risk without knowing the full extent of Harvard’s exposure to reputational and funding related fallout from a conflict with the federal government. If Harvard had indeed made its decision by April 9 and did not disclose it, this would warrant serious scrutiny.”
Concluding her letter, Stefanik emphasized accountability: “As a tax-exempt institution with immense influence over public policy, academic standards, and federal research funding, Harvard should be held to the highest standard of financial transparency. Market participants deserve complete, timely, and accurate disclosures especially when institutions seek access to public capital markets while under federal investigation.”
The full letter can be accessed through Stefanik’s official website.
