Former Quadrangle Group principal Steven Rattner will pay $6.2 million as part of a settlement with the SEC on charges that he paid kickbacks to get business from the $124.8 billion New York State Common Retirement Fund, Albany.
Mr. Rattner, who oversaw the Obama administration's auto industry overhaul, also agreed not to associate with any investment adviser or broker-dealer for the next two years as part of the settlement.
Also Thursday, New York Attorney General Andrew Cuomo announced he filed two related lawsuits against Mr. Rattner in New York State Supreme Court, seeking at least $26 million and a lifetime ban from the securities industry in New York.
According to a complaint filed Thursday in U.S. District Court in New York, the SEC alleged that Mr. Rattner secured $150 million in investments for Quadrangle from the retirement fund in 2004 and 2005 after arranging for the distribution of the DVD of a low-budget film produced by David Loglisci, the fund's former chief investment officer, and his brothers. He also was accused of agreeing to pay more than $1 million in purported “finder” fees to Henry “Hank” Morris, a political adviser to Alan Hevesi, the state's former comptroller and the fund's sole trustee.
In a news release on the New York state lawsuits, Mr. Cuomo said: 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. Through these lawsuits, we will recover his ill-gotten gains and hold Rattner accountable.”
Quadrangle agreed in April to settle related investigations by Mr. Cuomo's office and the SEC, with payments of $7 million and $5 million, respectively.
Mr. Rattner could not be reached for comment. His attorney, William McLucas, a partner with the law firm Wilmer Cutler Pickering Hale and Dorr, declined to comment.
“We don't comment on enforcement matters,” said Mark Paustenbach, a spokesman for the Department of Treasury, in an e-mail response to questions. “This is a matter between Mr. Rattner and the legal authorities.”