Client Alert

Industry-Wide Investigation Announced Investigators to Examine Role of Placement Agents, Intermediaries and Middlemen in Public Pension Fund Investments

May 05, 2009

Kenneth M. Breen, Douglas Koff, Keith Miller, Lawrence J. Hass, Joshua H. Sternoff and Sean T. Haran

Multistate Task Force Formed and Dozens of Subpoenas Issued

Andrew Cuomo, the New York State Attorney General (NYAG), has announced that he and the attorneys general of 36 other states have formed a nationwide task force to share information about, and investigate, potential wrongdoing in the business of obtaining investments by state and local pension funds. As part of Mr. Cuomos investigation into pay-to-play practices, his office issued more than 100 subpoenas to investment management firms and funds that received investments from public pension funds in New York and to the so-called placement agents or finders used by those firms to assist in obtaining the investments.

The formation of the multistate task force and the flurry of investigatory subpoenas arrive on the heels of the announcement of civil charges by the SEC and criminal charges by Mr. Cuomos office against the former Deputy Comptroller of New York State and a placement agent. The defendants are charged with corrupting the approval process by which investment firms gained access to investments from the states largest public pension fund, in exchange for kickbacks. Mr. Cuomo also recently, in a separate case, charged a national consultant to pension funds, Saul Meyer of Dallas-based Aldus Equity, with felony securities fraud.

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