Memphis Money Manager Named in NY Case, Fired in Fort Worth

May 11, 2009 ( - Consulting Services Group (CSG), a long-time investment consultant recently fired by the city of Fort Worth public pension fund, has been caught up in the ongoing pay-to-play investigation focused on the New York state pension plan.

The Fort Worth Star-Telegram reported that the Securities and Exchange Commission (SEC) identified the consultant as among a number of firms that may have been fraudulently convinced to pay millions of dollars in sham “finder’s fees” to corrupt state officials in exchange for deals to manage pieces of the Empire State’s pension assets.

On April 22, after the SEC filed a civil complaint in the New York case, the Fort Worth Employees’ Retirement Fund replaced CSG as investment adviser, the newspaper said. CSG issued a statement on its Web site denying any wrongdoing and saying it made appropriate disclosures about how it pays for client referrals.

Named as a defendant in the New York case is Aldus Equity Partners, a Dallas company that the Fort Worth pension hired on CSG’s advice, the Star-Telegram reported (see  DiNapoli Sues Aldus over Pay-to-Play Scheme ).

ERF Executive Director Ruth Ryerson said CSG met its commitments to Fort Worth. “CSG was aboveboard in their dealing with us,” she told the newspaper. “They did what the contract said they should do.”

Fort Worth Councilman Jungus Jordan, a former pension board member, said he grew concerned two years ago when he learned that CSG served as both the overall adviser to the pension fund and, in another role, managed its $177-million hedge fund.

Ryerson told the Star-Telegram that CSG showed the board ways to create a hedge fund program at a cost savings and that the dual roles were made public. “It was all disclosed upfront; it was not necessarily a conflict,” she said.

The CSG statement is available here .