Rattner’s SEC case pulled from calendar

Steven Rattner was due to settle with the SEC over a pension corruption scheme today, but the proposed settlement was pulled from the calendar without explanation, according to Reuters. Reports this week suggested that Rattner would pay $6 million and taken a two-year ban from the securities industry. Neither the SEC nor Rattner’s spokesman would comment.

(Reuters) – A proposed settlement between Steven Rattner, the former head of the U.S. auto task force, and the Securities and Exchange Commission over a pension corruption scheme was unexpectedly pulled from Thursday’s calendar, one source with knowledge of the matter said on Thursday.

The five SEC commissioners were going to vote on a potential $6 million settlement that would have barred Rattner from the securities industry for two years.

But at the last minute, the case was dropped from the calendar for Thursday’s non public enforcement meeting, said the source. The source requested anonymity because the case has not been settled.

It was unknown why the SEC postponed the vote. The agency did not set a new date to consider his settlement, said the source. The SEC declined comment. Rattner’s spokesman had no comment.

New York Attorney General Andrew Cuomo is still probing Rattner’s role in a kickback scheme when Rattner was still at private equity giant Quadrangle Group LLC, according to a second source.

Rattner left the auto task force as Cuomo’s probe intensified.

A spokesman for Cuomo, New York’s Democratic candidate for governor, declined comment.

So far, Cuomo’s long-running investigation has prompted other states to begin similar probes and crackdown on placement agents, brokers who exploit political ties to reap millions of dollars of fees from investment companies that want to manage the public’s money.

Cuomo has recouped more than $100 million for the New York pension fund and captured seven guilty pleas, most recently from the former state comptroller Alan Hevesi.

The former Democratic comptroller pleaded guilty to a felony for getting the benefit of hundreds of thousands of dollars of political donations and fees paid to a lobbyist and free luxury trips to Italy and Israel.

New York’s comptrollers are the sole trustees of the state’s $132 billion pension fund.

The SEC and Cuomo have suggested that Rattner improperly paid off a political operative to win the lucrative business of investing some of New York’s pension fund.

The practice of making political contributions to pension fund officials to win investment contracts is also known as “pay-to-play.”

Investigators alleged that Quadrangle won a $100 million investment from the state pension fund by engaging in improper “quid pro quo” arrangements.

They said this involved agreements to pay more than $1 million in “finder” fees to Henry “Hank” Morris, a former top adviser to Hevesi, and distribute a DVD of the film “Chooch,” produced by former Common Retirement Fund chief investment officer David Loglisci, who later plead guilty.

In April, Quadrangle agreed to settle with the New York attorney general and the SEC.

At the time, Quadrangle said: “We wholly disavow the conduct engaged in by Steve Rattner… That conduct was inappropriate, wrong and unethical.”

New York’s current comptroller responded to Cuomo’s investigation by banning placement agents (Reporting by Joan Gralla in New York and Rachelle Younglai in Washington. Additional reporting by Megan Davies in New York. Editing by Robert MacMillan)