New York City's Fire Pension Bans Middleman, Joining Two Others
Bloomberg.com 5/16/09
New York City’s Fire Department Pension Fund, which has about $5 billion of assets, joined two other city funds and suspended use of middlemen for investments, city Comptroller William Thompson said.
The action yesterday came amid an investigation by New York state Attorney General Andrew Cuomo and the U.S. Securities and Exchange Commission into agents and money managers who cultivated ties to public officials and kickbacks to buy and sell access to pension funds.
New York, New Mexico and New York City’s pension funds for civil service employees, police officers and firefighters have moved to ban or suspend the use of middlemen.
Last month, Thompson asked Cuomo to investigate whether the city’s pension funds were “intentionally misled or deceived” about the identities of any placement agents involved in an investment by the city funds in Quadrangle Group LLC.
Quadrangle, an investment firm founded by federal auto taskforce head Steven Rattner, has come under scrutiny after a politically connected broker it used to win investments with New York state’s pension fund was arrested in a corruption probe.
Henry “Hank” Morris, 55, an adviser to former New York State Comptroller Alan Hevesi, was charged with soliciting millions of dollars of kickbacks and political contributions from firms managing money for the state. He worked for Greenwich, Connecticut-based Searle & Co. at the time.
Morris has denied wrongdoing. Rattner and Quadrangle haven’t been charged.
Investigation Sought
Thompson called for the investigation of the city’s pension funds after he learned through news reports that Morris accepted a placement fee for an $85 million investment by the New York City Employees’ Retirement System with Quadrangle.
Quadrangle had disclosed to the city only that it used two other firms -- Boston-based Monument Group and London-based Helix Associates -- to market its private equity funds, the comptroller said.
New York City’s pension funds, with combined assets of $77.1 billion as of March 31, invested $125 million in Quadrangle in 2005 and 2006, Thompson said.
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