New York City Comptroller Scott Stringer, who oversees $150 billion in pension assets, called for expanding a ban on agents who solicit investments for the city’s five pension funds.
Stringer, a Democrat who took office Jan. 1, also proposed bolstering financial-disclosure rules for employees who advise the funds. He will appoint a risk and compliance officer and an internal auditor to address potential conflicts of interest and strengthen controls at the comptroller’s Bureau of Asset Management.
“We must have a broader, formal ban to ensure that New York City does not experience the pay-to-play scandals that have plagued other funds in recent years,” Stringer said today in a speech to the Citizens Budget Commission. “These scandals cost taxpayers money and undermine public confidence in, and support for, pensions.”
Stringer is widening a ban on pension placements to cover assets classes other than private equity as New York state’s top financial regulator is probing companies advising city and state pension funds with more than $350 billion in assets. Stringer said his plan wasn’t a response to any abuses in the comptroller’s office.
Thornburg Investment Management and Sprucegrove Investment Management are the only firms among the city’s almost 250 money managers that employed placement agents, said Eric Sumberg, a spokesman for Stringer. Expanding the ban will require approval by the boards of the funds for police officers, firefighters, teachers, school administrators and civil employees.
Santa Fe, New Mexico-based Thornburg, which began managing international stocks for city pensions in January 2008, employed San Antonio-based Aureus Partners and the New York-based Marwood Group as placement agents, Sumberg said.
Rebecca Carrier, a spokeswoman for Thornburg, and Mark Wolff, chief financial officer for Sprucegrove, declined to comment.
Stringer appointed his general counsel, Kathryn Diaz, to implement the guidelines. Diaz formerly served as special counsel to Benjamin Lawsky, superintendent of the state Department of Financial Services, who is investigating pension advisers.
In November, Lawsky’s office sent subpoenas to 20 companies that provide consulting services to trustees of the pension funds in New York state and New York City to ensure their advice isn’t influenced by outside financial considerations.
Former New York State Comptroller Alan Hevesi pleaded guilty in 2010 to approving $250 million in pension fund investments in exchange for almost $1 million in gifts. He served more than 18 months in prison.
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