New York AG Cuomo: Drop sole trustee system from N.Y. state fund

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Andrew Cuomo

The $116.5 billion New York State Common Retirement Fund, Albany, would no longer have a sole trustee under legislation proposed by Andrew Cuomo, the state's attorney general.

Under the proposal, the state comptroller, currently Thomas J. DiNapoli, would become chairman of a 13-member board of trustees.

The proposal, called Taxpayers' Reform for Upholding Security and Transparency, also would ban investment firms from using placement agents, lobbyists or any other third-party intermediaries to interact with the state pension fund.

“For decades, the state pension fund has been weakened and corrupted by the sole trustee model,” Mr. Cuomo said in a news release. “The model has allowed pay-to-play to flourish in a system meant to protect the retirement accounts of thousands of hard-working public employees. To put it simply — the model doesn't work.”

Late last week, Saul M. Meyer, a founding partner of private equity manager Aldus Equity, pleaded guilty to New York state felony securities fraud charges in connection with pay-to-play allegations related to investments by the Common Fund. Mr. Meyer faces four years in prison.

Mr. DiNapoli said in a statement that Mr. Cuomo's proposal is “another good step forward toward reform,” noting that the bill would codify many of the reforms he has already implemented at the Common Retirement Fund.

As for creating a board of trustees, Mr. DiNapoli said: “New Yorkers are rightly asking questions about the best way to ensure ethical, honest management of the fund. The viability of a board should be put on the table.”