The Carlyle Group stated that it has “stopped using finders to ensure the integrity of the investment process” following the indictment of a New York state political figure to whom it paid $12 million in finder’s fees. The FT reports that the change in policy is part of the fall out from an investigation by the Securities and Exchange Commission and the New York AG’s office into alleged kickbacks paid to secure money from New York’s $105 billion Common Retirement Fund (previously discussed here).
The FT reports that compared with many of its rivals, Carlyle has been aggressive in using paid “finders” or placement agents to help it win deals to invest pension money. Carlyle has not been charged, and the firm says it is not a target of the investigation.
The SEC probe has focused on more than $4 billion in pension funds allocated in transactions that the authorities claim benefited Hank Morris, a former political adviser to former New York state comptroller Alan Hevesi. Carlyle paid $12 million to Morris to serve as a placement agent and received $1.3 billion from the state pension system for at least five funds, the firm said.