New Mexico Recovers $24M for Pensions

February 25, 2013 ( The New Mexico State Investment Council (NMSIC) has recovered more than $24 million as part of a settlement with Vanderbilt Capital Advisors.

In 2011, NMSIC filed suit against more than a dozen individuals, including placement agents, claiming they damaged the state and were unjustly enriched through pay-to-play and politically-motivated investments.According to an NMSIC news release, that case is progressing and is expected to generate further recoveries this year, but Vanderbilt was not among the defendants in the 2011 lawsuit and would have been the focus of a second round of NMSIC litigation against various investment funds.  

However, while a multistate probe of placement agents was ongoing in 2009, the former chief investment officer for New Mexico’s public schoolteachers’ pension fund charged in a lawsuit that the two state funds lost $90 million from investments they placed with Vanderbilt (see “Suit Alleges New Mexico Pension Pay to Play”). The suit was filed by ex-CIO Frank Foy who claimed an appointee of former Governor Bill Richardson pushed him to buy $50 million in collateralized debt obligations (CDO) from Vanderbilt Capital Advisors LLC of Chicago. The New Mexico State Investment Council purchased $40 million of the CDOs. In both instances, according to the suit, the investments were ultimately “worthless.”   

The suit said Vanderbilt had contributed at least $15,100 to Richardson’s ultimately aborted presidential campaign.   

The settlement includes a $20 million payment to NMSIC and $4.5 million to the Educational Retirement Board, recouping a portion of the investments the state made with Vanderbilt from 2004 through 2006.