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October 6, 2009

DiNapoli Submits Comment on SEC Pay-to-Play Proposal

Comptroller Supports National Rule Following New York State Ban

New York State Comptroller Thomas P. DiNapoli has submitted comment in support of the Securities and Exchange Commission’s “Proposed Rule Regarding Political Contributions by Certain Investment Advisers,” which would among other things remove so-called pay-to-play practices from pension fund investing. As head of the New York State Common Retirement Fund (Fund), DiNapoli banned pay-to-play political contributions regarding the Fund through an executive order signed September 23, 2009.

“I’ve addressed pay-to-play on the state level, and I’ve implemented a series of other reforms designed to eliminate opportunities for corruption and restore public trust in the integrity of the investment decision-making process,” DiNapoli said. “We’re taking care of business in New York, but this is a national problem. The SEC’s proposed regulations will bring broad-based reform on a national, industry-wide basis.”

DiNapoli’s pay-to-play ban is modeled after the SEC’s proposed regulation. His ban was the latest of his reforms to improve management of the Fund, increase transparency, restore ethics, and protect the Fund from fraud and abuse. Since taking office in February 2007, DiNapoli has also:

  • Banned the use of third-party placement agents and other paid intermediaries including lobbyists from involvement in the investment of Fund assets;
  • Initiated quarterly reporting of Fund performance;
  • Implemented monthly reporting on investment transactions completed by the Fund since February 2007, including placement agent and intermediary information where applicable;
  • Created the positions of Inspector General and Special Counsel for Ethics;
  • Strengthened the internal investment evaluation process to include review by the heads of all asset classes; and
  • Expanded and strengthened external advisory committees to enhance external review of investment procedures and decisions.

Click here for a copy of the comment letter.



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