Four private equity firms caught up in the New York pension pay-to-play scandal have agreed to stop using placement agents as part of a deal with the state’s attorney general.
Access Capital Partners, Falconhead Capital, HM Capital Partners and Levine Leichtman Capital Partners have agreed to adopt New York Attorney General Andrew Cuomo’s code of conduct as part of a settlement. The four firms also agreed to pay a total of $4.5 million in restitution.
The four firms are just the latest to accept Cuomo’s new rules in exchange for ending the investigation into them. The Carlyle Group and Riverstone Holdings have already done so; other major p.e. players, including Quadrangle Group, are in talks with Cuomo’s office.
“With seven firms now having signed our code of conduct, momentum is building in the industry to make our code the national standard to eliminate pay-to-play in public pension funds across the country,” Cuomo said.
Six people have been indicted so far in the scandal at the New York State Common Retirement Fund. 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.
HM Capital and Falconhead both employed a firm run by a key Hevesi aide indicted in the scandal, Hank Morris, while Access and Levine Leichtman unknowingly hired firms that split fees with Morris. Access had hired Barrett Wissman, who has pleaded guilty for his role in the pay-to-play scheme, who in turn allegedly paid off Morris to win the firm business.