Rattner Said to Be Near Settlement With SEC in Corruption Probe

Former political consultant Henry “Hank” Morris, charged as part of New York Attorney General Andrew Cuomo’s probe of corruption at the state’s pension fund, reached a plea deal with prosecutors, a Manhattan judge said.

The deal follows news last month that Quadrangle Group LLC co-founder Steven Rattner, the subject of state and federal investigations of corruption at the fund, is near a settlement with the U.S. Securities and Exchange Commission, according to a person familiar with the matter.

“The court is not willing to consider this on such short notice,” New York State Supreme Court Justice Lewis Stone said of the deal at a hearing yesterday. “In a matter as weighty as this, the court wants an opportunity to consider the papers.”

Rattner, 58, arranged to retain Morris, the former chief political consultant to ex-New York Comptroller Alan Hevesi, as a placement agent and paid him more than $1 million in sham “finder” fees, according to the SEC and Cuomo. Rattner also is accused of setting up a DVD distribution deal for a movie produced by the brother of a pension fund official. Hevesi pleaded guilty last month. Richard Bamberger, a spokesman for Cuomo, declined to comment.

In exchange, Quadrangle, a New York-based private-equity firm, obtained $100 million in investment commitments from the New York state Common Retirement Fund, said Cuomo, who resolved a probe of the firm in April for $7 million.

Morris was awaiting trial on charges he corrupted the investment process to benefit money managers who made campaign contributions and politically connected placement agents who received lucrative fees, including himself.

At least six other people besides Hevesi have pleaded guilty in connection with the New York probe, 15 firms besides Quadrangle have settled and more than $139 million has been paid to the fund and the state, according to Cuomo.

To contact the reporter on this story: David McLaughlin in New York State Supreme Court at dmclaughlin9@bloomberg.net and; Karen Freifeld in New York State Supreme Court at kfreifeld@bloomberg.net and;

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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Steven Rattner

Jin Lee/Bloomberg

Steven Rattner, former head of the U.S. Treasury department's auto task force.

Steven Rattner, former head of the U.S. Treasury department's auto task force. Photographer: Jin Lee/Bloomberg