NEW YORK (Reuters) – Connecticut Treasurer Denise Nappier said on Monday the state is terminating its investment agreement with Dallas-based private equity firm Aldus Capital LLC, after it was caught up in the criminal and civil probe of the New York State pension fund.
Connecticut committed $65 million to Aldus, which it hired in June 2008 to manage part of the state pension fund, Nappier said in a statement.
The move comes just a week after New York Attorney General Andrew Cuomo and the Securities and Exchange Commission filed charges against Aldus and one of its founding principals, Saul Meyer, in connection with a multimillion-dollar kickback scheme involving new York’s largest pension fund.
Nappier said the decision to terminate the Aldus relationship comes “out of an abundance of caution.” Given the probe of the company, “Aldus cannot remain focused on its Connecticut engagement,” she said.
The New York pay-to-play probe has caused Connecticut to review its disclosure policies. The probe has focused on the payment of placement agent fees — both by funds with a direct relationship to the New York pension fund as well as indirect relationships through sub-fund managers.
Connecticut will require all fund of funds managers to provide additional disclosure in the form of an affidavit from each sub-fund manager disclosing any third-party payments made in connection with its engagement by the state pension fund.
The filings will be made publicly available on the Treasury’s web site.
The disclosure rule will be extended to require managers that use placement agents to further reveal if the agent paid any sub agents.
“We have no tolerance for “pay to play” in Connecticut,” said Nappier. (Reporting by Ciara Linnane; Editing by Dan Grebler)