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Pensions Load up on Private Equity. Pay to Play?

September 4, 2009

Pay to Play?  Could it be that the multi-billion dollar pension funds attract the leeches? Please read: Pension probe looks at payouts to public officials

Steven Rattner, a founder of the private-equity firm, gave $20,000 in campaign contributions to Gov. Bill Richardson in 2002 and 2006. Richardson sits on the New Mexico State Investment Council.

The investment council approved a $20 million investment with Quadrangle in 2005. Richardson was not present for the vote.

The New Mexico investment has generated about $1 million in management fees for Quadrangle.

How handy to not be present.  Seems like a form of plausible deniability.

More can be read in the original NYT article N.Y. Pension Deals Seen as Focus of Wide Inquiry

The inquiry, which is examining the activities of a number of investment companies, focuses on what has been a widespread practice among hedge funds and private equity firms — paying so-called placement agents to gain business managing the pension funds run by states for public employees.

A “placement agent”.  How does one become a placement agent?  I suspect being politically connected is a requirement.

The Carlyle Group, which over the years has employed George H. W. Bush and the former British prime minister John Major, is among the most prominent of the firms under scrutiny, and manages $1.5 billion of the state’s pension assets.

State and local pensions are a huge pot of money and the vultures are after it.  These stories remind me of the poker table quote.  If you look around and don’t see the patsy, you’re the patsy.  I’m pretty sure the pension funds are the patsy.

And I think Leo at Pension Pulse would agree.  A Private Equity Quagmire.

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