New York attorney general Andrew Cuomo has issued more than 100 subpoenas to investment firms and placement agents in a hunt for evidence of illegal brokering of public pension capital.
A statement from the attorney general's office did not specify which firms had been issued subpoenas. But it noted that they had gone to “53 unlicensed agents and 49 investment firms that paid them”.
The dramatic broadening of Cuomo's investigation into allegedly corrupt practices in the New York public pension system comes a day after the arrest of Saul Meyer, the well known founder of Dallas-based Aldus Equity, a private equity advisory firm that had economic ties to Henry Morris, an indicted political operative at the center of the scandal.
The New York Times reported that among the placement agents issued subpoenas are Wetherly Capital Group and Gold Bridge Capital, both based in California.
The attorney general's office said it was attempting to discover a number of things about the way the investment firms and the allegedly unlicensed agents had interacted, including: “Which firms used which unlicensed agents, why, and in what manner; What fees unlicensed agents were paid, and for what services, if any; How the firm came to retain the unlicensed agent; Whether the firms did any due diligence about the unlicensed agents; and [w]hether payments to unlicensed agents were disclosed to the pension fund.”
Cuomo's office claims that it has concluded that 40 percent to 50 percent that brokered the business of New York state public pensions since 2003 were unlicensed. It says that except in certain cases it is illegal for agents to broker this business without being registered as securities broker-dealers.
In related news, Cuomo issued this statement regarding the expanding probe into public pension placement activities: “I just held a briefing with 100 individuals from 36 Attorneys General's Offices to discuss findings of our ongoing pension fund investigation. We decided to create a multi-state task force to explore pension fund abuse so states can share vital information to prosecute wrongdoing and facilitate nationwide reform. The task force will allow us to have a unified, efficient method for gathering information as we fight to combat corruption and restore transparency and integrity to public pension funds.”