Unlicensed broker pays $1m in New York 'pay to play' probe

New York Attorney General Andrew Cuomo said despite not having the necessary license, White brokered investments worth $500m on behalf of firms that paid him hundreds of thousands of dollars in fees.

White brokered investment deals by the CRF in the in the Guggenheim Partners Select State Fund, for which he secretly received in excess of $570,000 in fees, said Cuomo.

After obtaining one of these deals, White personally contributed and bundled contributions to former New York state comptroller Alan Hevesi's re-election campaign from the principals of one of the investment firms and bundled $50,000 in campaign contributions from the principals of a firm that got business from the fund.

Cuomo's probe of pay-to-play practices at the $124.8bn CRF has already seen six people pleading guilty in connection with the investigation. Some 15 firms have settled and agreed to adopt reforms that include a ban on intermediaries - or placement agents - obtaining investments from public pension funds and limits on campaign contributions to those with the power to assign investment business.

Among those who have pleaded guilty are former chief investment officer at the office of the New York State comptroller David Loglisci, former Liberal Party chair Ray Harding, investment advisor Saul Meyer and hedge fund manager Barrett Wissman. (Global Pensions; March 11, 2010)

"The state pension fund, which should be safeguarded for taxpayers, was instead served up to fixers, finders, and fundraisers like Bill White, who used his access to fill his pockets," said Cuomo.

"Unlicensed placement agents, secret fees, and even the appearance of pay-to-play erode taxpayers' trust and pose an intolerable risk to our pensioners' retirement funds. New York's pension system is fraught with systemic problems that we can no longer afford to ignore."

 

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• New York State Common Retirement Fund