Rattner Settles SEC Case; Hit With $26 Million Suit by Cuomo

New York State Attorney General Andrew Cuomo is suing former U.S. auto czar Steven Rattner for $26 million over allegations he paid kickbacks in order to get $150 million in investments from the state’s largest pension fund.

Rattner also settled charges brought against him by the U.S. Securities and Exchange Commission over the scheme, agreeing to pay a $6.2 million fine and accepting a two-year ban from associating with any investment adviser or broker-dealer.

Regulators allege that Rattner secured investments in the hedge fund Quadrangle – where he had been the principal – from the New York State Common Retirement Fund after he arranged for one of the firm’s affiliates to distribute a low-budget film produced by the pension fund’s chief investment officer David Loglisci and his brothers.

“Steven 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,” Cuomo said in a statement. “Through these lawsuits, we will recover his ill-gotten gains and hold Rattner accountable.”

Regulators said they uncovered evidence that Rattner arranged for a number of kickbacks aimed at influencing officials within the New York State Comptroller’s office to approve the pension fund’s investment in Quadrangle.

In addition to a DVD distribution deal for the movie “Chooch,” Rattner steered more than $1 million to Henry Morris, who was former New York State Comptroller Alan Hevesi’s top political adviser. He also arranged for a $50,000 donation to Hevesi’s re-election campaign, regulators said.

Meanwhile, Rattner made some $3 million in fees stemming from the state pension fund’s investment in Quadrangle, the SEC added. Quadrangle paid a $7 million settlement to the Attorney General’s office earlier this year and agreed to cooperate in the case against Rattner. The SEC previously filed charges against Morris and Loglisci for their roles in the scheme.

In New York, Cuomo’s case has led to seven guilty pleas so far, including one from Hevesi, the highest ranking official to be implicated.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio