Time to Ban Placement Agents, Says New NYC Pension Head

City Comptroller Scott Stringer has proposed “a steel barrier against pay-to-play abuses,” along with a broader compliance and ethics overhaul.

(January 31, 2014) – Scott Stringer, New York City’s new comptroller and overseer of its pension system, has announced a bevy of ethics rules for plan trustees and investment staff.

His six-point plan started with a proposal to ban all use of placement agents in the city’s five retirement systems. At present, agents are only prohibited in private equity transactions. Stringer promised to offer a resolution to trustees covering all asset classes, which he said would act as a “steel barrier against pay-to-play abuses.”

“The city’s pension funds and our Bureau of Asset Management have an open-door policy,” Stringer said in a speech on January 30. “We are willing to meet with any qualified firm interested in serving as an investment manager. Nobody needs a middleman to get them in our door.” 

Furthermore, the comptroller also vowed to appoint senior risk and compliance officers who would report directly to him.

Employees with control over investment decisions will also be subject to new ethics policies, according to the speech. In addition to the current practice of annually reporting their personal holdings to a city regulator, he said staff would be required to regularly report trading to the senior compliance manager.  

Stringer also plans to ramp up training on ethics, compliance, and conflicts of interest issues, with a focus on foreign asset control regulations, anti-money laundering protocols, and the Foreign Corrupt Practices Act.

Finally, in the wake of the disability benefits fraud scandal that recently led to the arrest of 72 city police officers, Stringer vowed to “develop an enhanced internal process for reviewing disability payments.”


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