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Another agrees to Cuomo's pension fund reform

By John O'Brien | Jul 2, 2009


NEW YORK (Legal Newsline) - A third company has signed New York Attorney General Andrew Cuomo's code of conduct designed to reform public pension systems.

Pacific Corporate Group Holdings, a pension fund advisor, also agreed to return more than $2 million in proceeds associated with a New York State Common Retirement Fund investment. The code of conduct bans campaign contributions to those who control public pension funds.

It also bans investment firms from using placement agents, lobbyists or other third-party intermediaries.

PCG is the first pension fund advisor to sign the code.

"PCG's adoption of our code sets a new standard for gatekeepers industry-wide," Cuomo said. "As a gatekeeper to public pension funds, PCG has a responsibility to exercise the highest level of ethical conduct in its work.

"By proactively adopting our code, PCG has set an important exxample for the industry."

Others who signed the code have paid more under their settlement agreements.

The Carlyle Group, a private equity firm first to sign, agreed to pay $20 million, while Riverstone Holdings agreed to pay $30 million.

Cuomo has been joined in his investigation by more than 30 states. He started by digging into former Comptroller Alan Heyesi.

Cuomo said Carlyle retained Hank Morris as a placement agent in 2003 to obtain investments from the New York Common Retirement Fund. Morris was the chief political aide to Heyesi.

Carlyle obtained approximately $730 million in investment commitments from the CRF, and the company paid Searle & Company, the broker-dealer associated with Morris, nearly $13 million in placement fees, Cuomo said.

The "lion's share" of those fees were paid to a company controlled by Morris, Cuomo said

Criminal charges have been filed against Morris. Cuomo has subpoenaed more than 100 investment firms.

Cuomo says PCG was a minority partner in a venture that was the brainchild of former Common Retirement Fund Chief Investment Officer David Loglisci. That venture, Strategic Co-Investment Partners, received a $570 million commitment from the CRF in 2006 in order to benefit Morris, Cuomo said.

Morris' secret ownership in SCP was hid from PCG, Cuomo said.

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