Law Firm Settles with NY AG in “Pay To Play” Investigation

New York AG Andrew Cuomo continues to obtain significant settlements in his "pay to play" investigation regarding New York pension funds. To date, Mr. Cuomo has obtained seven guilty pleas. Criminal charges are pending against the former Comptroller's political adviser, Henry Morris. The SEC has a parallel action in litigation. SEC v. Morris, Civil Action 09-CV-2518 (S.D.N.Y. Filed March 19, 2009) (here).

Law firm Manatt Phelps & Phillips, LLP became the latest party to settle with Mr. Cuomo. According to the New York AG, Manatt made introductions and secured meetings on behalf of firms seeking investments from public pension funds in New York, California and in other locations. The law firm and the attorneys involved were not licensed placement agents or securities brokers. Nevertheless, the firm made, and attempted to make, introductions to the New York City pension funds and the New York State Teachers Retirement System. Meetings were arranged involving these two funds, although they did not result in any transactions or the payment of fees to the law firm.

Manatt was only paid for one transaction, according to the New York AG. In 2003, the firm, in conjunction with Platinum Advisors, helped place $25 million by CalPERS in Levine Leichtman Capital Partners Fund III. The law firm and Platinum each received $187,500 in fees from 2004 through 2006.

To resolve the matter, Manatt agreed to pay a $550,000 fine to the State of New York. In addition, the firm will be barred from appearing before any public pension fund in New York for five years. It will also adopt the Attorney General's Public Pension Fund Reform Code of Conduct and cooperate with the on-going investigation.

For more news involving securities issues, visit SEC Actions, a blog by Thomas Gorman