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May 11, 2009



DiNapoli Urges Pay-to-Play Ban For Pension Fund Investing

Letter to SEC Supports Federal Solution to National Problem


New York State Comptroller Thomas P. DiNapoli in a May 7, 2009 letter to Securities and Exchange Commission Chair Mary L. Schapiro urged the Commission to prohibit pay-to-play practices related to public pension fund investing by adopting regulations similar to the broker-dealer campaign contribution restrictions that exist in the municipal securities market.

“Pay-to-play has absolutely no place in the management of public pension funds,” DiNapoli said. “I’ve implemented a number of effective reforms to address the problem in New York. But as we’ve seen with on-going investigations into public pension plan practices across the country, this is a national problem that needs a federal solution. The SEC can help restore public confidence in state and local government pension plans all across the nation.”

As sole fiduciary of the New York State Common Retirement Fund (Fund), DiNapoli banned the use of placement agents, paid intermediaries and registered lobbyists in investments with the Fund.

Since taking office in February 2007, DiNapoli has instituted a series of reforms to address the transgressions of the previous administration, including:

  • Banning the involvement of placement agents;
  • Creating a Pension Fund Task Force and formed the Koch-Zarb Commission to review operations of the Office of the State Comptroller;
  • Creating a mandatory ethics training program;
  • Drafting legislation to codify the pension fund reforms;
  • Partnering with the State Insurance Department to strengthen oversight of the Fund;
  • Hiring a law firm and independent investment consulting firm to review all investments with firms under investigation by the New York Attorney General and the SEC;
  • Creating Inspector General position and hiring Special Counsel for Ethics; and,
  • Publishing investment transactions monthly and pension fund performance quarterly.

DiNapoli also proposed Campaign Finance Reform legislation for the public funding of Comptroller campaign in 2010 to eliminate the opportunity for candidates to be influenced by wealthy donors and other interests. Even without changes in the law, DiNapoli has voluntarily limited the contributions to his campaign to less than one-half the legal limit.

Click here for a copy of the letter.

To learn about all of Comptroller DiNapoli's reforms to the pension fund, click here.

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