According to Bloomberg News, U.S. District Judge Stephen Wilson, at a September 30 hearing in Los Angeles, denied the SEC’s request to force Broidy to comply with its subpoenas and gave him until October 12 to produce the documents and until October 22 to testify, the dates suggested by his lawyers, according to a minute order posted today on the court’s Web site.
Regulators had accused Broidy of failing to give documents or testimony in an investigation of how public pension systems allocate funds to outside managers. Broidy, who hasn’t been accused of wrongdoing, has given “specious excuses” in the past four months to avoid producing all documents sought in subpoenas, and he failed to appear for testimony last week, the Securities and Exchange Commission wrote in its court filing, according to Bloomberg.
The SEC and New York Attorney General Andrew Cuomo are investigating whether money managers illegally paid placement agents for access to New York’s retirement funds. Broidy quit the Los Angeles Department of Fire and Police Pensions oversight committee in May after the SEC queried him about ties to firms under scrutiny in New York, according to the report.
The New York state pension fund was an early investor in Markstone, soon after Broidy created the firm in 2002. The Wall Street Journal reports that the New York pension fund committed $250 million to Markstone’s debut $800 million fund.
The case is SEC v. Elliott Broidy, 09-06980, U.S. District Court, Central District of California (Los Angeles.)
Probes into pay to play practices in New York by New York Attorney General Andrew Cuomo and the SEC expanded to other states (see Cuomo Announces Multi-state Effort on Pension Abuse ), and led some states to adopt new rules of their own (see NJ Adopts New Placement Agent Standards ).
In April, New York state Comptroller Thomas P. DiNapoli banned use of such “placement agents,” and said he had hired the Day Pitney LLP law firm and Pension Consulting Alliance, an independent investment consulting company, to help investigate any of the fund’s holdings connected to targets of the investigation by the state Attorney General and the U.S. Securities and Exchange Commission (SEC) (see DiNapoli Bars Placement Agents for Empire State Fund ).
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