Here’s a handful of additional notes on the NY State Common Retirement Fund situation and, in particular, yesterday’s decision by Comptroller DiNapoli to ban the future use of placement agents by firms requesting NYSCRF investments (find my initial take here):
*** I want to stress that I am in no way attacking the integrity of the current NYSCRF private equity staff, whose morale right now must be lower than that of Montreal Canadiens fans (happy 100 years). In fact, I have to wonder if the lid would have been blown off this scandal earlier, if New York had some sort of whistleblower shield to protect them from ratting out their bosses. Kind of reminds me of the Ohio BWC situation, where good staffers got caught up in something not of their own doing.
*** The ban extends beyond placement agents, but a NYSCRF spokesman says that it will not extend to things such as the use of a third-party data room or printing company. I’m supposed to be emailed the official guidelines later today, and will post them. From what I can tell, they are not yet on the NYSCRF website.
*** If you are a PE firm that used a placement agent, but are already in the midst of being diligenced by NYSCF, you’re okay (seems the ban comes with a grandfather clause).
*** DiNapoli has hired outside consultants to review current policies and relationships, but the placement agent ban is not up for discussion.
*** It seems that New York City is planning to follow suit on the placement agent ban. Also, Carlyle Group announced that it would no longer use finders anywhere in the U.S. That latter part was an agreement with Cuomo, and looks like a legal olive branch.
*** NYSCRF has no plans to add new investment staff at this time. They’ll just have to do more with less (something that has never worked in any context).
*** It’s been seven months since New York’s last private equity chief left. Yet the NYSCRF website still lists that individual as the sole contact on its Alternative Investments page. Even worse, the listed email address bounces back without any forwarding information. I actually brought this lack of basic competence up to a NYSCRF spokesman a couple of months back, and wrote about it again yesterday (A Placement Agent Walks Into a Bar…). Has it been fixed? Of course not.
*** So how do you actually pitch a fund to NYSCRF? Apparently you just call the main number, and they’ll connect you to a member of staff. Sounds like too simple to work, but it does (tried doing so this morning).