March 19, 2009
Kickbacks, anyone?
The SEC has today filed suit against David Loglisci, a 38 year old ex-investment banker who, from 2004 to 2007, served as CIO and Deputy Controller of the New York State Common Retirement Fund together with his alleged accomplice, Henry Morris.
According to the SEC's website,
The SEC's complaint alleges that Henry "Hank" Morris, the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi, and David Loglisci, former Deputy Comptroller and Chief Investment Officer of the New York State Common Retirement Fund, orchestrated a fraudulent scheme from 2003 through late 2006 that corrupted the integrity of the New York State Common Retirement Fund in order to enrich Morris as well as others with close ties to Morris and Loglisci.
Specifically, the SEC alleges that Loglisci caused the fund to invest billions of dollars with private equity firms and hedge fund managers who together paid millions of dollars in the form of sham "finder" or "placement agent" fees to obtain investments from the fund. As asserted in the SEC's complaint, Morris made more than $15 million in such purported placement and finder fees.
The SEC Litigation Release and detailed complaint - which names a wide variety of hedge funds and private equity managers - can be downloaded here.
It remains to be seen whether this will be an isolated case or whether, with this example, other investors will be found to have abused the web of retrocessions, finders fees, third party marketing costs etc. etc.
Hedge Fund Operational Due Diligence
Posted at 07:00 PM
