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May 14, 2009


DiNapoli Commends Attorney General Cuomo's Agreement

State Comptroller Thomas P. DiNapoli today praised Attorney General Andrew M. Cuomo for incorporating many of DiNapoli’s pension fund reforms into the settlement agreement between the Attorney General’s office and the Carlyle Group regarding its relationship with the New York State Common Retirement Fund (Fund).

DiNapoli noted the settlement with the Carlyle Group incorporates DiNapoli’s ban on the use of placement agents, paid intermediaries and registered lobbyists. In addition, it includes transparency requirements and limitations on conflicts of interest similar to those mandated by regulations adopted in November 2008 requiring investment managers, consultants and advisors to acknowledge annually that they owe the Fund a fiduciary duty and must disclose any conflicts of interest.

“The reform process is on-going,” DiNapoli said. “The Attorney General’s investigation continues to peel away layer upon layer of Hevesi-era abuse and misconduct. Since I took office two years ago, we’ve taken a series of steps to reform the Fund. Last month, we banned the use of any form of paid intermediaries in Fund investments. Last week, I urged the SEC to ban campaign contributions from investment professionals. Today, the Attorney General is taking those reforms nationwide. It’s a great next step.”

DiNapoli also announced he has sent a letter to Securities and Exchange Commission Chair Mary L. Schapiro asking the SEC to use any settlements in the on-going pension fund fraud litigation to make restitution for any damages caused to the Fund and its members and retirees.

“Payments made by defendants should be used for the benefit of those members and retirees,” DiNapoli said. “The SEC’s Fair Fund program, which has returned billions of dollars to defrauded investors, is the right tool to make that happen. This is a chance to provide at least some financial restitution.”

DiNapoli noted that he is independently pursuing legal remedies from individuals and firms that have allegedly committed fraud against the Fund. Last week, DiNapoli’s office filed suit against Aldus Equity Partners, L.P. seeking rescission and other damages.

As sole fiduciary of the Fund, DiNapoli on April 21 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 forming 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 investments with firms under investigation by the New York Attorney General and the SEC;
  • Creating an 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 the 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 to learn more about DiNapoli’s reforms to the pension fund.


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