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NYC pensions expand ban on placement agents

  • Original measure came during pay-to-play scandal
  • NYC bans placement agents for all asset classes
  • Comptroller Scott Stringer elected to post on Nov. 5

New York City Comptroller Scott M. Stringer, elected in November on the ticket with Mayor Bill de Blasio, called the new measure “an ironclad ban on placement agents for all transactions” involving the New York City Pension Funds, a measure he said was overdue. The city’s private equity portfolio is valued at more than $17 billion.

“Ending the involvement of intermediaries in pension funds’ transactions will ensure that the integrity and independence of our investment decisions are beyond reproach and without conflict,” he said in a prepared statement.

The New York City Pension Funds include New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and the Board of Education Retirement System.

The original resolution passed by the New York City Employees’ Retirement System and dated on April 28, 2009, was made up of two sentences, including an approval of the recommendation to suspend the use of “placement agent firms and middlemen” in the engagement of private equity firms.

On the private equity front, New York City has yet to replace Barry Miller, former head of private equity for the Big Apple pension system, after he joined Landmark Partners last year.

Current New York Governor Andrew Cuomo led a probe of corruption at the New York State pension system while he was attorney general. Eight people pleaded guilty in the scandal, including Elliott Broidy, founder of Markstone Capital Partners, the Los Angeles-based private investment firm.

Many of the details of the pay-to-play scandal emerged in 2009, when alleged kickbacks were paid to manage state pension money. Cuomo filed a 123-count indictment in March of that year in New York State Supreme Court.