For some time now, the government has been investigating the practices of the firms which manage the assets of the New York State Common Retirement Fund (“CRF”). The problems stem from fees paid by these firms to certain middlemen, called “placement agents”, to gain the right to manage the assets. The fees themselves are not illegal. However, allegations have been made that, with the firms’ knowledge, a portion of the fees have been illegally used to benefit certain officials so this right can be obtained.
In connection with this investigation, according to an April 22, 2009 press release, State Comptroller Thomas P. DiNapoli has banned the involvement of placement agents, paid intermediaries and registered lobbyists in investments with CRF. The ban includes entities “compensated on a flat fee, a contingent fee or any other basis.”
The press release is here.