Controversy and scandal surrounding state pension funds and their relationships with private equity funds is going to be a big story. That’s cause when these PE investments were returning (on paper) 30% a year, nobody cared the manner which this money was being made.
Now that funds are freezing up and tanking, suddenly folks want to know how states ended up putting so much money into highly leveraged investments.
New York Attorney General Andrew Cuomo and SEC lawyers are investigating Carlyle, hedge funds and other private-equity firms that did business with New York’s employee pension fund, according to the person, who declined to be identified because the probe isn’t public.
“Carlyle has fully cooperated with the New York Attorney General’s investigation,” Christopher Ullman, a spokesman for Washington-based Carlyle, said today in a phone interview. “We understand this is an industry-wide investigation and that we are not the focus.”
The probe is related to civil lawsuits and criminal charges filed last month by Cuomo and the SEC against former New York state Deputy Comptroller David Loglisci and political adviser Hank Morris for allegedly soliciting millions of dollars in kickbacks from firms managing the state’s retirement fund.
Morris was a so-called placement agent for Searle & Co., a registered broker-dealer that arranged deals between Carlyle and the New York State Common Retirement Fund, the person said. Morris allegedly pressured the investment firms to use Searle’s services and received millions of dollars in payments in exchange, court filings show. Read the whole thing >