Results tagged “statepensionfund”

Attorney General Andrew Cuomo announced that private equity firm Riverstone Holdings agreed to adopt his office's Public Pension Fund Code of Conduct plus pay $30 million to the NY State Pension Fund for its role in pay-to-play dealings. Cuomo has been investigating how numerous firms paid intermediaries to gain access to the NY State Pension Fund; Cuomo said, "If you knew and paid the right people, you could do business in New York. Hundreds of millions of dollars in taxpayer money went to people who were politically connected. That’s not going to be allowed any more." Some of those right people allegedly include aides to the former state comptroller. This settlement is the second; equity firm Carlyle also agreed to pay $20 million to the NY State Pension Fund, whose declined 26%.

State Comptroller Thomas DiNapoli announced today that the NY State pension fund fell 26.3%, with its value now $109.9 billion. The global economic crisis contributed to the decline, and Crain's New York reports, "It isn’t clear what percentage of the decline is due to souring private equity investments, but the fund had about $11 billion worth of such investments and $4.5 billion of “absolute return” investments—also known as hedge funds—according to the previous fiscal year’s annual report. That’s about double the amount held in 2005." However, DiNapoli also said the pension fund is "built to survive even the most challenging investing environments. For example, the Fund saw the value of its assets decline by about $30 billion in the markets that followed the dot-com bust and the Sept. 11, 2001 terrorist attacks, only to see steady recovery in the subsequent years." However, in order to meet future retirement obligations, employers and taxpayers will give greater contributions.

Yesterday, Attorney General Andrew Cuomo announced that Wall Street firm the Carlyle Group agreed to pay $20 million to settle its involvement in the state pension fund scandal. And the group, which the NY Times calls "one of the largest and most politically connected private equity firms," also agreed to no longer use placement agents to gain entrance to pension funds. The state pension fund scandal, which has led to similar issues with pension funds in NYC, California, and other states, involves firms pays these middlemen—some politically connected—kickbacks for help meeting comptrollers and the chance to handle millions in the pension funds. Cuomo said, "This is a revolutionary agreement. I believe it totally changes the way people operate: It ends pay-to-play, it bans the selling of access, it puts the political power brokers out of business." Tulane Law professor Elizabeth Nowicki said, "The onus is going to be on the private-equity firms to really market their results. They need to go out and get business the old-fashioned way."

Well, of course, the state pension fund probe was bound to tangle more people in its web, but now a former U.S. Senator? Former senator Robert Torricelli of NJ was questioned by NY State authorities back in 2007 over his work at an investment firm Searle where Hank Morris—former aide to former State Comptroller Alan Hevesi and recently indicted for taking millions in fees to place investment firms with pension funds—also worked. A spokesperson for Torricelli, who is a licensed broker-dealer, said, "Senator Torricelli is a private businessman. The securities firm where he’s registered properly documents and discloses all information as required by law," and his lawyer pointed out that Torricelli left Searle after the questioning. Internationally speaking, the Post reports that Israeli company Giza Venture Capital paid fees to an LA-based placement firm for getting Giza to manage $20 million of state pension money—but investigators are wondering if the LA firm then paid Searle.

The Attorney General's office, already investigating the state pension fund, is now looking at the NYC pension fund. The NY Times reports, "Investigators have long been examining why a tiny firm operated by Daniel Hevesi, a former state senator and the son of a former state comptroller, Alan G. Hevesi, was paid more than $1 million in fees for his role as an intermediary in deals with pension funds in New York City and for deals in New Mexico." (Two of Hevesi's cronies have already been indicted in the state pension fund corruption probe.) NYC Comptroller William Thompson already announced his office was investigating the use of placement agents (aka the middlemen who collect fees to match funds with investment firms) but the AG's investigation would reportedly be broader. On the state side, the Daily News says that Assembly Speaker Sheldon Silver arranged meetings between investors—such as former Rangers goalie Mike Richter— and the state comptroller's office. While none of those investors were selected, watchdog group Common Cause says, "It's very inappropriate because it looks as if the speaker is using his office as the most powerful elected official in the Assembly to try and influence the controller."

The trouble is just starting for private equity firm Quadrangle. Last week, it was revealed the firm's founder—and current White House auto bailout chief—Steve Rattner allegedly paid $1 million to a middleman to be included in the state's pension fund. Now it appears the investigation is heating out up over his attempts to have Quadrangle included in other pension funds—like those of New Mexico, LA and NYC. Apparently Quadrangle paid middleman/placement agent fees to the firm of Hank Morris, already indicted in state pension fund scandal, to drum up business—the NY Times reports that after a meeting with the NYC Comptroller's office, "Mr. Rattner left the meeting irritated that his own considerable connections did not seem to be enough. He soon hired Mr. Morris." City Comptroller Thompson's office is now investigating over whether Quadrangle lied about not naming Morris as a placement agent. (Also, Morris was also former State Comptroller Alan Hevesi's political consultant/top fundraiser!) To that end, the State Comptroller Thomas DiNapoli has banned placement agents from the pension fund, but a NY Times editorial suggests that the Legislature needs to create an independent body that watches the investments the State Comptroller makes.

The state pension scandal, in which investment firms allegedly paid middlemen—state employees who were aides of former comptroller Alan Hevesi—to be included in the fund, has now apparently reached the Beltway. Sort of. Steve Rattner, who founded private equity firm The Quadrangle Group but is now heading up President Obama's auto industry task force, is apparently listed in the SEC's documents. The NY Times reports that while Rattner is not named, he is "described... as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business." A U.S. Treasury spokesperson said Rattner let the Treasury know about the investigation before coming aboard.

A political consultant who used to work with Senator Schumer and former State Comptroller Hevesi and a former deputy State Comptroller were charged with 123 counts of enterprise corruption for allegedly taking over $30 million in state pension fund fees. NY1 reports that Hank Morris, the consultant, "is believed to have pocketed millions in middleman fees from financial firms that won business with the pension fund during Hevesi's tenure." The NY Post further explains that companies that won business from the state pension fund "paid a little-known Connecticut financial firm called Searle & Co. 'placement fees' - 95 percent of which went to Morris, officials said." David Loglisci, who used to work for Hevesi, was also charged.