Los Angeles Pension May Dump Aldus

(Reuters) – The Los Angeles Fire and Police Pensions fund board will vote on Thursday on whether to fire Aldus Equity Partners due to concerns raised by New York’s probe of kickbacks paid by private equity funds to win state pension fund business, an official with the California fund said on Monday.

The $10.7 billion Los Angeles Fire and Police Pensions’ board will also consider strengthening disclosure policies for all investments and begin its process for hiring a new private equity consultant, Chief Investment Officer Tom Lopez said.

“We’re going to widen our net so it doesn’t just cover private equity,” Lopez told Reuters, referring to improved disclosure at his pension fund.

Aldus was not immediately available for comment.

Private equity fund Aldus was one of a number of firms named in litigation arising from a two-year probe by New York Attorney General Andrew Cuomo and the U.S. Securities and Exchange Commission.

Last Thursday, the SEC said it filed civil charges against Aldus and founder Saul Meyer for their alleged participation in a multimillion-dollar kickback scheme involving New York’s largest pension fund.

The SEC’s lawsuit accuses Aldus and Meyer of paying $320,000 in sham finder fees to get the New York State Common Retirement Fund to invest $375 million in 2004-06.

Meyer was also charged last Thursday with a state securities felony under New York’s Martin Act. His lawyer Paul Shechtman said Meyer is innocent.

Last Friday, Cuomo said he has issued more than 100 subpoenas to investment firms and their agents who do business with New York state’s $122 billion pension fund.

Also on on Monday, Connecticut Treasurer Denise Nappier said the state is terminating its investment agreement with Dallas-based Aldus after it was caught up in the criminal and civil probe of the New York State pension fund.

Citing the investigation, New Mexico Gov. Bill Richardson last week ordered the state investment officer to cut ties to Aldus and told the State Investment Council to suspend alternative investments until it requires placement agents to disclose fees for winning state business.

The Federal Bureau of Investigation interviewed New Mexico investment fund staff last month about Aldus.

“They did discuss some items with our director of private equity and our general counsel,” said Charles Wollmann, spokesman for the State Investment Council, which oversees New Mexico’s trust fund. “The thrust of that was regarding Aldus.”

(Reporting by Jim Christie; Editing by Jan Paschal)