Meyer, a founder of the now-defunct Aldus Equity, pled guilty to felony securities fraud charges for his involvement—his firm advised the pension fund—in the pay-to-play kickback schemes at the New York State Office of the Comptroller and the Common Retirement Fund, but was able to avoid prison time for cooperating with law enforcement authorities. (See “Cuomo Announces Guilty Pleas in Pay-to-Play Probe.”)
Starting in March 2009, the Securities and Exchange Commission (SEC) filed securities fraud and related charges against several participants in the scheme, including Henry Morris, the top political adviser to former New York State Comptroller Alan Hevesi, and David Loglisci, formerly the deputy comptroller and the chief investment officer of New York State’s Common Retirement Fund.
Morris and Loglisci orchestrated a scheme to extract sham finder fees and other payments and benefits from investment management firms seeking to do business with the Common Fund. In all, the Commission charged 17 defendants, including various nominee entities through which payments were funneled and certain of the investment management firms and their principals.
As the principal of an investment management firm, Meyer was alleged to have made unlawful payments to Morris in connection with one of the transactions at issue. The civil action had been stayed until the outcome of the New York Attorney General’s Office’s parallel criminal action against some of the defendants charged by the SEC, including Meyer.
After his guilty plea, Meyer was sentenced to a term of conditional discharge due to his cooperation with law enforcement authorities and ordered to forfeit $1 million. In the SEC's federal court action, Meyers consented to entry of a judgment that permanently enjoins him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
In addition to the judgment entered in the federal court action, the SEC issued an administrative order on June 10 imposing remedial sanctions against Meyer. The SEC’s administrative order bars him from associating with any broker, dealer, investment adviser, municipal securities dealer or transfer agent, subject to a right to reapply after seven years.
Judgment was entered by the Honorable Katherine Polk Failla, United States District Judge for the Southern District of New York on May 22. The SEC said in a statement that its claims are now fully resolved.
The end of the state fund's placement agent scandal comes following an announcement this week by New York City Comptroller Scott Stringer that the city's five pension funds would no longer use placement agents. “The passage of an ironclad ban on placement agents for all transactions involving the New York City Pension Funds was long overdue,” Stringer said. “Ending the involvement of intermediaries in pension funds’ transactions will ensure that the integrity and independence of our investment decisions are beyond reproach and without conflict.
The SEC’s litigation release can be read here.
« OneAmerica Streamlines Retirement Plan Participant Website