‘Unbelievably painful’

Quadrangle’s Rattner speaks out about the pay-to-play scandal.

Quadrangle co-founder Steve Rattner’s involvement in New York Attorney General Andrew Cuomo’s investigation into the state’s pension kickback scandal was “the most painful thing that’s ever happened to me professionally by a wide margin,” Rattner said in an interview in October.

Earlier this year, Quadrangle reached an agreement with Cuomo to pay $7 million to settle its case. At the time the settlement was announced, the firm accused Rattner of behaving in an “inappropriate, wrong and unethical” manner when Rattner hired political operative Henry Morris to solicit the New York State Common Retirement Fund for a commitment. Rattner is mentioned in court documents, but has not been accused of wrong-doing and has denied allegations.

Rattner left Quadrangle last year to take up a high-profile post with the administration of US President Barack Obama, heading up a team restructuring the US auto industry. He served on the post for about six months, before stepping down amid reports that he was somehow involved in pay-to-play situations.


“It’s certainly fair to question my integrity, it’s just unbelievably painful,” Rattner told the Business Insider in a video interview.

Rattner is reportedly close to a settlement with the US Securities and Exchange Commission under which he would pay about $6 million and be banned for two years from the securities industry, the Wall Street Journal reported earlier in the month.

In the interview moderated by Business Insider founder Henry Blodget, Rattner said he would have done things “differently” while at Quadrangle, but did not mention Morris or any specific situations related to the scandal.

Meanwhile earlier in the month, former New York state comptroller Alan Hevesi pleaded guilty to a felony charge in connection with the pay-to-play scandal involving the $125 billion state pension system.

Hevesi, who served as state comptroller from 2003 to his resignation in 2006, admitted to accepting nearly $1 million in exchange for approving a $250 million investment in Markstone Capital Partners from the New York State Common Retirement Fund. He will cooperate in New York attorney general Andrew Cuomo’s ongoing pension fund investigation and faces up to four years in prison.

It was widely reported in recent weeks that Hevesi had offered to plead guilty in the investigation. In addition to the guilty plea, Hevesi also acknowledged that, while serving as state comptroller, he was aware of his former political advisor Henry Morris’ using the pension fund for a pay-to-play scheme. Morris was one of the first people charged in the investigation for allegedly masterminding the scheme to collect sham finder’s fees from private investment firms in exchange for directing pension money their way.

The pension system’s former chief investment officer, David Loglisci, also pleaded guilty in the probe and is cooperating.