(October 29, 2009) – New York Attorney General Andrew Cuomo has unveiled his new plan to revamp the Empire State’s beleaguered pension system.
Coming after months of revelations regarding placement agents and pay-to-play scandals with the New York State Common Retirement Fund, Cuomo’s proposal would place tight limits on political contributions to those in charge of running the state retirement system’s investments. It would also increase disclosure from investment managers, institute a code of conduct, require conflicts of interest to be disclosed, and – most damagingly for the middlemen who act as go-betweens for investment managers and investors – would ban the use of lobbyists or placement agents when dealing with public funds. The Securities and Exchange Commission – as was reported in ai5000’s Fall issue – is also looking into a similar ban nationwide.
The most significant part of the proposed plan, however, would be an alteration to the sole trustee structure of the $120 billion Common Fund. If passed, it would create a bipartisan board of trustees to make investment decisions, which now are made by a sole trustee, an elected official.
However, State Comptroller Thomas DiNapoli is expressing concern that the Cuomo initiative might not be allowed under state rules. Although the State’s constitution is not explicit in its requirement for a sole trustee structure, DiNapoli, through an aide, has questioned whether the move would pass muster under New York’s constitution. He also has repeatedly asserted that by increasing transparency, eliminating the use of placement agents, and lowering campaign limits, he has done enough to fend off calls for a revision of the sole trustee structure.
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