Thursday, December 30, 2010
Rattner agrees to pay $10M to settle NY pay-to-play pension scandal
The New York attorney general, Andrew M. Cuomo, announced on Thursday an agreement with Steven L. Rattner that resolves allegations that Mr. Rattner engaged in a kickback scheme involving the state’s pension system.
Under the terms of the settlement, Mr. Rattner will pay $10 million in restitution to the State of New York and will be barred from appearing in any capacity before any public pension fund in the state for five years. He did not admit to any wrongdoing.
The agreement will settle two lawsuits filed in November against Mr. Rattner, who oversaw the federal rescue of the auto industry, by the attorney general’s office.
“I am gratified that we have been able to reach an agreement in this case, as it resolves the last major action of our multi-year investigation,” Mr. Cuomo said in a statement. “The state pension fund is a valuable asset held in trust for retirees and supported by taxpayers. Through the many cases, pleas and settlements in this investigation, I believe we have been able to help restore and protect the integrity of the state pension fund.”
Mr. Cuomo will be sworn in as New York’s governor on Saturday.
In a statement issued in conjunction with the agreement, Mr. Rattner said: “I am pleased to have reached a settlement with the New York attorney general’s office, which allows me to put this matter behind me. I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult. I respect the work of the attorney general and his staff to ensure that the New York State Common Retirement Fund operates properly and in the best interests of New Yorkers.”
In November, Mr. Rattner settled with the Securities and Exchange Commission, agreeing to disgorge $3.2 million related to the accusations and pay a penalty of $3 million. He also accepted a two-year ban from certain Wall Street businesses. He did not admit or deny wrongdoing.
Mr. Cuomo had previously sought stiffer penalties, including $26 million.
The dispute between the two men began several years ago, when the attorney general’s office began examining how investment firms won business from the pension fund and whether they had improper dealings with officials.
Mr. Rattner’s former private equity firm, Quadrangle Group, reached a settlement earlier in the year, admitting to paying Hank Morris, a top adviser to a former New York State comptroller, Alan G. Hevesi, for his help in securing investments from the New York pension fund.
Before helping found Quadrangle, Mr. Rattner was a former reporter for The New York Times who went on to work as an investment banker at Lazard. When he was appointed to head the Obama administration’s auto task force in 2009, he disclosed a net worth of $188 million to $608 million.