New York State Attorney General Andrew M. Cuomo on Monday announced agreements with Israeli venture capital firm Markstone Capital Group LLC and California-based placement agent firm Wetherly Capital Group LLC and its broker-dealer DAV/Wetherly Financial to resolve their roles in the state’s investigation into corruption involving the Common Retirement Fund.
Both firms will adopt Cuomo’s Public Pension Fund Reform Code of Conduct, according to a release from Cuomo’s office. Markstone will return $18 million to the CRF and Wetherly will return $1 million associated with CRF investments. Wetherly also agreed to exit the placement agent business.
“Markstone and Wetherly are the eighth and ninth firms to adopt our Code of Conduct, which ends pay-to-play political contributions and the selling of access to public pension money nationwide,” Cuomo said in the statement. “New York’s taxpayers deserve rigorous protection against political influence in our public pension funds. I commend these firms for furthering our reform efforts and returning a combined $19 million to the state pension fund.”
The code bans investment firms from hiring, using or compensating placement agents, lobbyists or other third-parties to communicate or interact with public pension funds to obtain investments. To avoid such schemes, the code prohibits investment firms from doing business with a public pension fund for two years after the firm makes a campaign contribution to an elected or appointed official who can influence the fund’s investment decisions. The provision also bars all firms doing business with the pension fund from making such campaign contributions.
Investment firms must also disclose any conflicts of interest to fund officials or law enforcement authorities.
Copies of the settlements can be found on the AG’s Web site at www.ag.ny.gov.