Riverstone Pays $30M, Agrees to New Conduct Code

June 12, 2009 (PLANSPONSOR.com) - A second private equity firm has hashed out a settlement with New York state Attorney General Andrew Cuomo as part of Cuomo's probe into the use of private placement agents at public pension funds.

The Wall Street Journal reported that Riverstone Holdings will pay $30 million and has also agreed as part of a new code of conduct to drop the use of placement agents. A joint Cuomo-Securities and Exchange Commission (SEC) investigation has focused on potential placement agent abuse at the Empire State pension fund.

Cuomo, recently hammered out a $20-million settlement with Carlyle Group, which runs a joint venture with Riverstone (see  Carlyle Group Agrees to $20-million Settlement in NY Pension Probe ).

Under that new code, Carlyle and Riverstone agreed not to use middlemen who earn fees by helping to work out money management agreements for investment funds. The two firms also agreed to restrictions on campaign contributions to officials who control pension fund money, the Journal reported.

The Journal said both Riverstone and Carlyle paid fees to placement agent Hank Morris that are now under scrutiny.   Morris is a former top aide to New York state comptroller Alan Hevesi, who previously oversaw the pension fund.

A Carlyle-Riverstone joint venture agreed to pay Morris’s firm 2% of any investment it received from New York, according to authorities. Morris is now facing criminal charges in New York for influence peddling and has pleaded not guilty.

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