The European Venture Capital & Private Equity Association (EVCA) has published a draft code of conduct for placement agents in the wake of the scandal surrounding the New York State Common Retirement Fund.
A set of behavioral rules, the code is concerned with best practice, adherence to regulation, and lays down transparency and accountability requirements for all placement agents that advise on private equity fund raising. It applies globally and is a supplement to EVCA’s existing code of conduct.
EVCA set up a task force – chaired by Mounir Guen at MVision – following revelations that private equity firms and hedge funds were making improper payments to placement agents for access to the New York State Common Retirement Fund. A nationwide investigation is now under way in the US led into the “pay-to-play” practice, led by New York Attorney General Andrew Cuomo.
The scandal has already seen the Carlyle Group, Riverstone Holdings and PCG Corporate Partners Advisors II agree to pay back a respective US$20m, US$30m and US$2m to the pension fund.
Javier Echarri, EVCA secretary general said: “Placement agency is a valuable, legitimate and institutionalised service, which provides important broad-based fundraising advice for fund managers of all sizes, while encouraging investment diversification for public pension funds.”