Rattner To Settle Pay-To-Play Scandal Charges

Oct 14 2010 | 10:12am ET

Steven Rattner, the founder of alternative investments firm Quadrangle Group, will accept a two-year ban from the securities industry to settle charges stemming from an alleged kickbacks scheme at New York’s largest public pension fund.

Rattner, who until last summer served as President Barack Obama’s top adviser on restructuring the U.S. auto industry, will also pay a $6 million fine for allegedly paying $1.1 million in finder fees to Henry Morris, the chief political consultant to former New York Comptroller Alan Hevesi. Hevesi’s office oversaw the New York State Common Retirement Fund, which invested $100 million in a Quadrangle private equity fund, earning the firm $7 million in fees.

Hevesi himself pleaded guilty to criminal corruption charges last week.

The deal with Rattner comes more than three months after the SEC first proposed a three-year bar. Rattner countered that he would accept a one- or two-year ban.

Rattner left Quadrangle to serve as Obama’s auto czar. The New York-based firm agreed to pay $7 million to settle a probe by New York State Attorney General Andrew Cuomo in April, and at the time said, “we wholly disavow the conduct engaged in by Steven Rattner.”

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