Tuesday, 24 May 2016
Last updated 19 min ago
May 15 2009 | 9:14am ET
The Carlyle Group has agreed to pay $20 million over its role in a pay-to-play scandal at a New York public pension fund.
The private equity giant’s settlement with the New York attorney general’s office also includes an agreement to stop using placement agents to drum up business from public pension funds. Carlyle announced shortly after the scandal at the New York State Common Retirement Fund. The deal shields Carlyle from any further action by the attorney general, Andrew Cuomo.
“This is a revolutionary agreement,” Cuomo said. “I believe it totally changes the way people operate: It ends pay-to-play, it bans the selling of access, it puts the political power brokers out of business.”
Six people have been indicted so far in the scandal, which has engulfed such well-known alternatives firms as Quadrangle Group and Pequot Capital Management. Two have pleaded guilty for their role in the scheme which paid kickbacks to a pair of top aides to former New York Comptroller Alan Hevesi, whose office oversees the Common Retirement Fund.
A Carlyle spokesman said the firm was “pleased to announce today that we have reached a successful resolution with the attorney general and strongly support his efforts to implement reforms that usher in a new era of transparency and accountability into the pension fund investment process.” The Washington, D.C.-based firm manages some $1.5 billion for the Common Retirement Fund, earning it $13 million in fees every year.