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Wetherly Capital Settles With Cuomo In Pay-to-Play Investigation

Placement agent Wetherly Capital signs settlement with New York Attorney General over pay-to-play investigation, endorses code of conduct.

Placement firm Wetherly Capital Group signed a settlement agreement with New York Attorney General Andrew Cuomo today in connection with fees it made from helping money managers win business from the New York State Common Retirement Fund, the now $126 billion pension plan, between 2002 and 2006.

The settlement is part of the New York attorney general’s pay-to-pay investigation, which has focused on allegations that some money managers or their advisers paid kickbacks in order to win the lucrative business of the state fund when it was under the watch of then New York State Comptroller Alan Hevesi, its sole fiduciary.

Wetherly, which matched money managers with public pension funds, has also agreed to sign Cuomo’s proposed code of conduct — a pledge that money managers will not use third party marketers to solicit business from public funds. “Our firm supports Mr. Cuomo’s proposals because we think they are good for the industry,” said Daniel Weinstein, CEO of Los Angeles–based Wetherly Capital, in a statement. “More importantly for me, we are very pleased to have resolved our issues.”

According to its statement, Wetherly will pay back approximately $1 million in fees made from business dealings with the Common fund — transactions that “were principly handled by an outside sub-agent and a former employee who left the firm five years ago and who recently pled guilty to securities fraud.”

Wetherly is currently winding down its public fund placement agent business.

An October 2009 Institutional Investor investigative report, Shadow Lands, delved into the role of political patronage in the public pension fund system.

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