Former Obama administration official Steven Rattner was sued by the US Securities and Exchange Commission (SEC) and New York Attorney General Andrew Cuomo Thursday for his role in a pay-to-play scheme involving New York’s pension fund.
Rattner, the former auto czar, agreed to pay $6.2 million and to a two-year ban from associating with any investment adviser or broker-dealer to settle the SEC allegations, the SEC said Thursday.
Separately, Cuomo’s office filed two lawsuits against Rattner, seeking at least $26 million and an immediate lifetime ban from the securities industry.
“While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General’s office prefers political considerations instead of a reasoned assessment of the facts,” Rattner said in a statement. “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity—and I certainly did not violate the Martin Act. That’s why I intend to clear my name by defending myself vigorously against this politically-motivated lawsuit.”
Regulators have been probing allegations that members of former New York Comptroller Alan Hevesi’s office and a former political adviser essentially sold access to New York’s $125 billion Common Retirement Fund, one of the country’s largest pension funds.
In its lawsuit, the SEC alleged that Rattner secured investments for his former firm, Quadrangle Group, after he arranged for a firm to distribute a low-budget film that was produced by David Loglisci, the retirement fund’s chief investment officer, and his brothers.
“Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal, and funneling campaign contributions,” said Cuomo, who is the incoming governor of New York. “Through these lawsuits, we will recover his ill gotten gains and hold Rattner accountable.”
Rattner, under pressure from former Hevesi political adviser Henry “Hank” Morris also allegedly arranged a $50,000 contribution to Hevesi’s reelection campaign in 2006, the SEC said.
A month after arranging the contribution, Loglisci allegedly increased the retirement fund’s investment with Quadrangle from $100 million to $150 million, the SEC said.
Quadrangle settled with the SEC and Cuomo earlier this year without admitting or denying wrongdoing.
Last month, Hevesi pleaded guilty to a corruption charge and agreed to cooperate in Cuomo’s investigation. Seven people, including Hevesi and Loglisci, have pleaded guilty in the matter. Morris also has agreed to plead guilty in the matter, according to people familiar with the matter.
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