Law Firm Manatt Phelps & Phillips Settles Role in NY Pension Investigation

(October 13, 2010) — As part of a $550,000 settlement with Attorney General Andrew Cuomo in the state’s ongoing pay-to-play investigation, the law firm Manatt Phelps & Phillips has agreed to a five-year ban from appearing before public pension funds in New York state, including the $124.8 billion New York Common Retirement Fund, the third-largest in the US.

Manatt stated that it would agree to a complete ban on appearing before any public pension – including all state, local and municipal funds – within the state of New York during a five-year period. The firm additionally agreed to cooperate with Cuomo’s ongoing investigation into pay-to-play, abiding by a new code of conduct, which, among other things, bans the use of placement agents to solicit investments from public pension funds and prohibits investments within two years of any campaign contribution from the investment firm to the Comptroller or other elected trustee.

Cuomo’s office revealed that Manatt secured meetings on behalf of firms seeking investments from public pension funds in New York, California, and elsewhere from 2003 to 2008. In 2003, for example, Manatt and a California-based lobbyist Platinum Advisors helped to place a $25 million investment by CalPERS in Levine Leichtman Capital Partners. Both received $187,500 in fees from 2004 through 2006. And from January 2004 to May 2005, certain Manatt partners introduced or sought to introduce additional alternative investment firms to various institutional investors.

“Neither Manatt, nor any of the Manatt partners who made the introductions, were licensed placement agents or securities brokers under state and federal law,” Cuomo said in a news release. Additionally, he stated the law firm made and attempted to make introductions to the New York Common Retirement Fund, $103 billion New York City pension funds, and the $77.6 billion New York State Teachers Retirement System.”

“We commend Attorney General Cuomo for investigating the placement process for pension fund investments and we embrace his new Reform Code of Conduct,” Manatt Phelps & Phillips said in a statement included in Cuomo’s announcement. “The firm is pleased to put this matter behind us.”

To date, Cuomo’s investigation has recovered more than $139 million for the state and has already resulted in seven guilty pleas, Cuomo’s office revealed. Last week, Alan Hevesi, former State Comptroller, pleaded guilty in New York State Supreme Court to accepting nearly $1 million in gifts in exchange for approving $250 million in investments for the New York State Common Retirement Fund between 2003 and 2006.