NEW YORK (Reuters) – New Mexico’s pension fund, which is taking a closer look at its investment partners in the wake of the New York pension fund scandal, said on Monday it has put private equity investments on hold and suspended its relationship with an advisor.
“The situation in New York was enough of a concern to members on the Council that they wanted to put private equity investments on hold pending further development of the information in front of them,” New Mexico State Investment Council’s Public Information Officer Charles Wollmann told Reuters.
Wollmann said that the pension fund suspended its relationship with private equity advisory business Aldus Equity on Wednesday but did not say that the Dallas-based firm did anything wrong.
Last month, Henry Morris, the former New York state comptroller’s top fund raiser, and David Loglisci, New York State’s pension investment chief, were charged with taking millions of dollars in kickbacks from money manager firms.
Morris, who was associated with Connecticut-based advisory firm Searle, made over $15 million in purported placement and finder fees between January 2003 and December 2006, a U.S. Securities and Exchange Commission complaint said in March.
Aldus was one of a number of firms referenced in the complaint as having links with Loglisci and Morris, although the firm is not accused of wrongdoing. The SEC complaint said Loglisci and Morris recruited Aldus Equity Partners to manage the Retirement Fund’s emerging fund portfolio.
Aldus confirmed the suspension in a letter sent to the New Mexico State Investment Council (SIC) dated April 16, in which it said it was “very disappointed by the decision.”
“Aldus has diligently served the SIC as an advisor, acting in a non-discretionary capacity, since 2004,” the letter, sent to Reuters, said.
It emerged on Sunday that the pension kickback scrutiny had spread to New Mexico.
The Carlyle Group [CYL.UL], one of the world’s biggest private equity firms, used Searle in New Mexico a couple of years ago, a spokesman for Carlyle confirmed on Sunday. Carlyle has not been accused of any wrongdoing in connection with the probe.
Private equity firm Quadrangle also hired Searle seeking an investment from the New Mexico fund, a source close to Quadrangle said on Sunday, although it did not pay Searle a fee. Quadrangle has also not been accused of wrongdoing.
Wollmann said SIC has now asked for additional information from its investment partners regarding their use of placement agents.
“We have a fair amount of information and we do anticipate there to be follow up — either we’ll ask for more disclosure or better disclosure, and we’re asking across all investment allocations,” he said.
By Megan Davies
(Editing by Phil Berlowitz)