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April 16, 2010
SEC files charges against former car czar's company
The company co-founded by Obama's former car czar Steve Rattner is in trouble with the SEC.
The agency has filed charges alleging that the Quadrangle Group "improperly secured a $100 million investment from the New York state pension fund after improper "quid pro quo" arrangements."
The state of New York has settled with the company, but significantly, has disavowed Rattner's actions:
Quadrangle has "disavowed" Rattner's behavior and has agreed to help the investigation, Cuomo's office said Thursday morning.
In a statement, Quadrangle neither admitted nor denied any allegations and said it would make payments of $7 million to the state of New York and $5 million to the SEC. Quadrangle also agreed to adopt a code of conduct similar to those adopted by other investment firms that have settled with Cuomo, including the District-based Carlyle Group.
Rattner has not been charged with any wrongdoing. A spokesman for Rattner declined to comment.
Thursday's developments were the latest in a years-long investigation by Cuomo's office into whether private-equity firms and hedge funds knowingly participated in a pay-to-play scheme to get investments from New York's state pension fund.
According to authorities, an unnamed "senior executive" of Quadrangle, whom sources close to the investigation identified as Rattner, met with David Loglisci, the pension fund's former chief investment officer, in late 2004 to solicit investments. That meeting was followed by another in which Henry Morris, a former top aide to former New York comptroller Alan G. Hevesi, solicited a "finder's fee arrangement" with Quadrangle. A Quadrangle affiliate then agreed to pay $88,841 for the DVD distribution rights to a low-budget film, "Chooch," produced by Loglisci and his brothers.
No wonder Obama had an affinity with Rattner. He must have felt he was back in Illinois, working with a guy who knows how to "pay for play."
Hat Tip: Ed Lasky