Updated with correction
PCG Corporate Partners Advisors II will return $2.1 million in management fees to the New York State Common Retirement Fund, Albany, halting an investigation by New York Attorney General Andrew Cuomo into pay-to-play allegations.
Mr. Cuomo’s office had been investigating PCG’s $750 million joint venture, Strategic Co-Investment Partners, with hedge fund manager Clinton Group and Barrett Wissman, a hedge fund manager and friend of David Loglisci, former CIO at the $109.9 billion New York state fund, according to a news release from Mr. Cuomo’s office.
The news release said PCG senior management did not know that Henry Morris, chief political aide to former New York State Comptroller Alan Hevesi, had an ownership interest in the joint venture. Messrs. Morris and Loglisci face criminal and civil charges in the pay-to-play probe. Mr. Wissman pleaded guilty to securities fraud and paid $12 million in penalties.
In a statement included in the release, PCG stated it is taking responsibility for “the improper actions of a former executive.” A PCG spokesman declined to make a statement other than the one in the news release.
PCG’s parent firm, Pacific Corporate Group Holdings, will adopt Mr. Cuomo’s code of conduct barring it from using outside third-party marketers or placement agents when raising a fund in the U.S.
Adopting the code “represents a natural next step in our efforts to meet or exceed the high fiduciary standards adhered to by PCG Holdings, and that are expected of those entrusted with public funds,” PCG said in the news release.