Securities Law Blog

The Quadrangle Group LLC has agreed to pay $12 million to settle the Securities and Exchange Commission’s (SEC) claim that the investment firm was linked to a widespread multi-billion dollar kickback scheme to obtain investments from the $130 billion New York State pension fund.

The SEC alleges that Quadrangle secured a $100 million investment from the New York State Retirement Fund after former executive Steven L. Rattner arranged for an entertainment company, owned by Quadrangle, to distribute the DVD for a low-budget film produced by former New York State Deputy Comptroller, David J. Loglisci, and his brother.

According to the SEC’s complaint, filed in federal district court in Manhattan, Rattner worked with Henry Morris, top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi , to obtain investments from the Retirement Fund.

Allegedly Morris presented the idea of helping Loglisci’s brother to distribute his film “Chooch” through Quadrangle’s connections at Good Times Entertainment (GT). Following several failed attempts by Loglisci’s brother to convince GT Entertainment’s CEO to distribute the film, Rattner allegedly emailed the CEO with instruction to “dance along” with Loglisci’s brother while he figured out whether Quadrangle “needed” the distribution deal in order to secure an investment from the Retirement Fund.

The SEC alleges that three weeks after GT Entertainment agreed to distribute the DVD, Loglisci notified Rattner that the Retirement Fund would be investing $100 million in the Quadrangle fund. Since the fund’s investment in 2005, Quadrangle has received $5 million in management fees.

Without admitting or denying wrongdoing, Quadrangle has agreed to pay $7 million to the pension fund and $5 million to the SEC.