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NEW YORK — Four more private equity firms involved in a corruption scandal at New York's public pension fund have agreed to pay restitution and implement reforms, state Attorney General Andrew Cuomo announced Thursday.
The companies settling with the state include HM Capital Partners, Levine Leichtman Capital Partners, Access Capital Partners and Falconhead Capital LLC.
Together, they will pay about $4.5 million to the state's common retirement fund, which invests money on behalf of about 1 million current and former government workers.
The companies were among a larger group of investment firms criticized over their actions in an alleged "pay-to-play" scheme involving state officials who oversaw the retirement system.
Two ex-aides to former Comptroller Alan Hevesi, who resigned in 2006, are awaiting trial on charges that they instructed the companies to hire politically connected middlemen, known as placement agents, as a condition of doing business with the state.
As part of the settlement, the companies have agreed to stop using placement agents in their dealings with public pension funds.
The SEC has proposed a similar ban that would apply nationwide and Cuomo said Thursday that the regulation would help clean up a part of government that has historically been "rife with fraud."
The proposal has been opposed by the marketers, who say that the majority of placement agents provide legitimate services.
Donna DiMaria, president of the Third Party Marketer's Association urged Cuomo and the SEC to take actions that "address the crux of the problem," which she said was corruption among public officials.
"It is the pension plans that need to straighten up and tighten their rules," she said. "We agree with him that there needs to be reform. We do not think its fair that he is singling out placement agents and third party marketers."
In New York's case, most of the placement agents at the center of the scandal weren't involved in financial services at all until Hevesi's election.
None of the four firms involved in Thursday's settlement faced charges, but they had each been scrutinized for paying huge fees to Hevesi allies in connection with pension fund deals.
HM Capital and Falconhead each agreed to pay lucrative placement agent fees to the comptroller's longtime campaign manager, Hank Morris.
Access and Levine Leichtman also paid similar fees that were later passed on to Morris, although Cuomo's office said that happened through intermediaries without the companies' direct knowledge.
The four companies all said in statements that they endorsed Cuomo's proposed reforms and were committed to "transparency," in their dealings with public pension funds.
