Quadrangle Group LLC was accused in a court filing by its former head, Steven Rattner, of trying to shift responsibility to him after settling investigations related to the New York state pension fund by federal regulators and Attorney General Andrew Cuomo.
Rattner filed a petition yesterday in New York State Supreme Court to obtain documents and testimony for an undisclosed arbitration proceeding he brought Sept. 2 against the private-equity firm.
The arbitration arises out of a “pattern of bad faith and retaliatory treatment of Mr. Rattner” by Quadrangle and its current managing partners after his departure as managing principal in February 2009, according to the petition.
“In 2010, to buy peace with Cuomo, the Quadrangle parties falsely charged Mr. Rattner -- both publicly and privately -- with misconduct,” his lawyers said in the petition. They could have disclosed their involvement with “the underlying facts, including those facts that exculpated Mr. Rattner and showed their own involvement or they could offer the NYAG a scalp. They chose the latter,” according to the petition.
Rattner yesterday resolved a U.S. Securities and Exchange Commission probe and settled a government suit against him for $6.2 million. Cuomo separately sued Rattner yesterday over his dealings with the pension fund. Quadrangle settled with Cuomo and the SEC in April.
Quadrangle’s settlement with the SEC and Cuomo was accompanied by a statement by Quadrangle saying Rattner’s conduct was “inappropriate, wrong and unethical.” Cuomo’s office required Quadrangle to make the statement as a condition of the settlement, according to two people familiar with the matter. Quadrangle agreed to pay $7 million to Cuomo and $5 million to the SEC without admitting or denying wrongdoing.
Cuomo, in his suit filed yesterday against Rattner, seeks at least $26 million and an immediate lifetime ban on him working in the securities industry in New York, according to an e-mailed statement.
“Mr. Rattner now has a lot to say,” Richard Bamberger, Cuomo’s director of communications, said in a statement. “But when he was questioned under oath about his pension fund dealings he was much less talkative, taking the Fifth and refusing to answer questions 68 different times.” Bamberger called Rattner’s claims that he did nothing wrong “ridiculous.”
“Given the attorney general made repeated threats of prosecution, of course Mr. Rattner’s lawyers advised him not to speak,” said Davidson Goldin, a spokesman for Rattner.
In his petition yesterday, Rattner said Quadrangle and its current managing principals took money owed him after he left.
“There is no basis” for Rattner’s original claims, Quadrangle said in a letter to its limited partners yesterday.
Rattner’s petition “is filled with inaccuracies and misrepresentations, which continues his pattern of failing to take responsibility for his actions,” the firm said in the letter, provided by Quadrangle spokesman Andy Merrill.
Goldin disputed Quadrangle’s characterization of the filing, saying the petition is “an accurate reflection of the facts and the self-interested behavior of the Quadrangle managing principals.”
Rattner said he’s seeking evidence through the petition that will help him establish Quadrangle’s accusations are false. He’s seeking information from David Loglisci, former head of alternative investments at the pension fund, and ex-New York Comptroller Alan Hevesi concerning the fund’s investment in Quadrangle Capital Partners II, according to the petition.
The SEC said in its lawsuit against Rattner that he and Quadrangle garnered $150 million in investments from the pension fund in 2005 and 2006 as part of a so-called pay-to-play scheme. In settling that case, Rattner agreed to be barred for two years from associating with broker-dealers or investment advisers.
Rattner stepped down as managing principal of Quadrangle to serve as head of the U.S. government’s auto task force that oversaw the restructuring of General Motors Corp..
Quadrangle Asset Management has handled the personal and philanthropic finances of New York Mayor Michael R. Bloomberg, whom Rattner supported through his chairmanship of Democrats for Bloomberg during the 2005 re-election campaign.
Bloomberg is the majority owner of Bloomberg LP, the parent of Bloomberg News.
The case is In the Matter of the Petition of Steven L. Rattner, 115100/2010, New York state Supreme Court (Manhattan).