NY State disgorges placement fee details

State comptroller Thomas DiNapoli has today released details on 94 funds to which former comptroller Alan Hevesi committed capital. The comprehensive list also includes the names of placement agents used and the fees they were paid.

The office of the New York State Comptroller today released details on placement fees paid in conjunction with investments made by the state pension under the leadership of Alan Hevesi, who resigned in 2006 amid a corruption scandal.

The current New York comptroller is Thomas DiNapoli.

The list, available here, details the economic terms granted to placement agents in 94 transactions with private equity funds, real estate funds and hedge funds. It is the most detailed disclosure yet in the ongoing public pension investigation sparked by the arrest of Henry Morris, a political operative, and David Loglisci, a former pension official under Hevesi who allegedly directed pension business at the behest of Morris-controlled placement firms.

The list includes previously reported arrangements between Searle & Company, run by Morris, and well known private equity firms The Carlyle Group and Quadrangle Group, among others, as well as fees paid by Aldus Equity to Pantigo, another Morris-linked firm. Saul Meyer, the founder of Dallas-based investment advisor Aldus, was arrested last week and charged by Cuomo’s office with knowingly paying what amounted to kickbacks to Morris.

For approximately half of the fund placements on the list, no economic terms are disclosed. DiNapoli’s office says of these: “We are still in the process of verifying this information.” Other than the firms previously named in complaints from the New York State Attorney General's office and the SEC, the firms listed are not accused of any wrongdoing. 

DiNapoli’s office has not released a similar list of placement fees paid during DiNapoli’s administration, although his office has consistently disclosed the names of placement agents paid in conjunction with pension commitments.

The placement agents disclosed include those well known to the private equity real estate community, such as Merrill Lynch and Credit Suisse. The list also includes some less familiar names, such as Flandana Holdings, an entity controlled by alleged Loglisci friend and former hedge fund manager Barrett Wissman, which placed the Access/NY European Middle Market Buyout Fund. This fund is managed by the pan-European fund of funds firm Access Capital Advisors. According to the disclosure, Access agreed to pay 50 percent of its “management fees and carry” to Flandana. 

According to a recent SEC complaint, Wissman and Flandana “have consented, without admitting or denying the SEC's allegations, to the entry of a partial final judgment that imposes all of the permanent injunctive relief sought in the amended complaint and defers the determination of disgorgement and financial penalties until a later date”.

A separate Wissman entity, called W Investment Strategies, is listed as being part of a fund management firm called Strategic Co-Investment Partners, a co-investment programme affiliated with Pacific Corporate Group, the San Diego private equity investment advisor.