I wrote last week that NY Common was particularly ripe for corruption, because its system is designed as a single fiduciary. One bad apple, therefore, is the only apple. The only other state with a similar system was Connecticut, and that ended up with both an elected treasurer and private equity manager in prison.
But maybe I transposed the cause and effect. As someone suggested to me yesterday: “The corruption didn’t happen because it was a single fiduciary. It got exposed because it was a single fiduciary.”
In a related line of thinking, perhaps Loglisici’s strategic mistake was using one corrupt “placement agent,” instead of using three or four.
*** I’ve had multiple public pension managers (past and present) tell me some version of the following: “I am/was responsible for X% of the private equity portfolio. It was made clear to me that I shouldn’t concern myself with the rest.”
*** Many of the PE firms who received tainted commitments have spent thousands in related legal fees. Not because they necessarily did anything wrong, but because you always hire a pricey attorney when the SEC and Martin Act-enabled AGs come a ‘knocking. Ironically, these legal fees are often paid via management fees, which are paid by LPs like New York Common Fund.
*** In many ways, this is the worst time to be involved in a financial scandal involving public monies. On the other hand, it’s arguably the best time to be involved in this particular scandal. After all, almost no one in the mainstream biz press is paying any attention. Too many other things to write about. The indictments have even fallen off of Andrew Cuomo’s homepage, because there’s so much new stuff on AIG, etc.