Quadrangle Slams Steve Rattner, Settles with Cuomo and SEC

This is not a good day for Steve Rattner.

The SEC this morning sued his former firm, Quadrangle Group, for a kick-back scheme related to the New York State pay-to-play scandal. Specifically, it says that Quadrangle knowingly helped finance a film being produced by the brother of a state pension official, in order to secure state fund capital. [Update: Quadrangle quickly settled the SEC suit, agreeing to repay $5m]

In related news, Quadrangle agreed to repay $7 million to the State of New York, via an agreement with AG Andrew Cuomo. As part of the latter deal, Quadrangle said the following:

“We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund. That conduct was inappropriate, wrong, and unethical.  We embrace the reforms in the Attorney General’s Code of Conduct, including the campaign contribution and placement agent ban, which are vitally necessary to eliminate pay-to-play practices from the public pension fund investment process.  We urge others in the industry to follow.”

This is just breaking, so I’ll have much more soon. You can read the SEC’s complaint by clicking here.

Cuomo is holding a press conference at 11am this morning. I’ll live-blog it below:

Quadrangle just issued the following statement:

Quadrangle Capital Partners (“Quadrangle”), a global private investment firm focused exclusively on investing in the communications, media, and information industries, is pleased to announce today that it has reached resolution with the Offices of the New York Attorney General (“NYAG”) and the Securities and Exchange Commission (“SEC”) concerning the investigation of public pension fund investments in New York. The NYAG and the SEC stated in their respective agreements that the matters under investigation related solely to the actions of former Quadrangle employees. As part of these settlements, Quadrangle neither admitted nor denied any allegations, will make payments to New York State of $7 million and the SEC of $5 million, and adopted the NYAG’s Public Pension Fund Code of Conduct.

As noted by the NYAG, Quadrangle’s current management has cooperated fully with these investigations. Quadrangle supports the efforts of the NYAG and the SEC to ensure that the manager selection process is based solely on merit. In 2009, Quadrangle implemented revised compliance policies that were consistent with the Code of Conduct and best practice in the industry.

Quadrangle believes this resolution is in the best interests of its investors, whose interests are the paramount concern of the firm.

Yes, there seems to be some inconsistency: The SEC files charges against Quadrangle, and Quadrangle says it has settled with the SEC. We are trying to sort it all out… I did just talk to a Reuters SEC reporter, however, who said that it’s not unusual for the SEC to file charges and then settle almost immediately. [Update: Yup, they settled]