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September 23, 2009

DiNapoli Executive Order Bans Pension Fund Pay-to-Play

Implements Interim Policy in Advance of SEC Rule

New York State Comptroller Thomas P. DiNapoli has banned pay-to-play practices related to the $116.5 billion New York State Common Retirement Fund (Fund) by issuing an executive order that prohibits the Fund from doing business with any investment adviser who has made a political contribution to the State Comptroller or a candidate for State Comptroller. The ban, which closely parallels proposed Securities and Exchange Commission (SEC) regulations, will last for two years from the date of the contribution.

“Pay-to-play has no place in the management of public pension funds,” DiNapoli said. “I’ve met with the chair of the SEC to urge the implementation of a national ban on pay-to-play political contributions, but we don’t have to wait for the SEC to finalize its proposed rule. We were ahead of the curve on banning placement agents. Now we’re ahead of the curve on ending pay-to-play. I’m exercising my power as the head of the Fund to eliminate pay-to-play right here, right now.”

DiNapoli’s pay-to-play ban is his latest action 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:

  • 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 DiNapoli’s policy.


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