Steven Rattner, Obama's former car czar, is forking over $6.2 million and is banned from associating with any investment advisor or broker-dealer for two years, in a settlement with the SEC, avoiding further court action over his role in a pay-to-play investment scheme over New York State pension funds. Chad Bray and Michael Rothfeld of the WSJ explain:
Regulators have been probing allegations that members of former New York Comptroller Alan Hevesi's office and a former political advisor essentially sold access to New York's $125 billion Common Retirement Fund, one of the country's largest pension funds.
In its lawsuit, the SEC alleged that Mr. Rattner secured investments for his former firm, Quadrangle Group LLC, after he arranged for a firm to distribute a low-budget film that was produced by David Loglisci, the retirement fund's chief investment officer, and his brothers. Mr. Rattner, under pressure from former Hevesi political advisor Henry "Hank" Morris also allegedly arranged a $50,000 contribution to Mr. Hevesi's reelection campaign in 2006, the SEC said.
Of course Rattner denies all wrongdoing, and still faces a suit from the New York Attorney General (and governor-elect) Andrew Cuomo:
"While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General's office prefers political considerations instead of a reasoned assessment of the facts," Mr. Rattner said in a statement. "This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity-and I certainly did not violate the Martin Act. That's why I intend to clear my name by defending myself vigorously against this politically-motivated lawsuit."
Things could get very interesting for the man who, despite zero auto industry experience, ruled over our largest manufacturing sector:
In a radio interview on Thursday morning, Mr. Cuomo said Mr. Rattner had exercised his fifth amendment right not to answer questions 68 times under oath. Asked about whether Mr. Rattner could face criminal charges, the attorney general said, "On the question of criminality, it is an ongoing investigation."
Mr. Cuomo claims in part that Mr. Rattner paid more than $1 million in sham placement fees to Mr. Morris, who then used his influence to steer investments from the retirement fund to Quadrangle.
Hat tip: Ed Lasky