NY Comptroller Urging Pension Funds To Adopt Placement Agent Ban

(Reuters) – New York City Comptroller William Thompson said on Tuesday he will urge New York City’s pension funds to adopt New York state Attorney General Andrew Cuomo’s anti-corruption code drafted last week.

The code bans investment firms managing pension funds from hiring or paying placement agents, lobbyists, or other third-party intermediaries to win business.

It further prohibits firms from doing business with a public pension fund for two years after it makes a campaign contribution to any official who could influence the fund’s investment decisions.

“I have carefully reviewed the attorney general’s code of conduct that was recently released and fully support the principles set forth in the code,” Thompson said.

Thompson is the first local government comptroller to offer support for the code, which Cuomo drew up in response to a probe of former New York State Comptroller Alan Hevesi for allegedly accepting kickbacks from money managers.

Cuomo’s probe, as well as a parallel investigation by the Securities and Exchange Commission, focuses primarily on the role played by Henry Morris, Hevesi’s top fundraiser, in providing access to the state’s $122 billion pension fund.

Morris has been indicted along with the pension fund’s chief investment officer. Lawyers for both men say they are not guilty.

The probe has been expanded to a number of other state pension funds, including those in New Mexico and California. For details, see [ID:nN12318406]

Thompson’s own office is also being investigated by Cuomo for its use of placement agents in hiring money managers for the city’s pensions funds.

Last week, private equity fund The Carlyle Group CYL.UL agreed to pay $20 million as a settlement for using Morris as a middleman. The firm also agreed to adopt the code in its dealings with pension funds across the country. [ID:nN14504266]

Cuomo on Tuesday commended Thompson for supporting the measure.

“The public pension fund industry is badly in need of reform and it is high time we ended pay-to-play,” he said in a statement.