SEC Brings Charges Against Former New York Pension Official and Two Broker-Dealers in Undisclosed Pay-to-Play Scheme

This case was brought in the end of 2016 against the former director of the New York State Common Retirement Fund – the nation’s third largest public pension fund – and two broker-dealers accused of conducting a scheme in which lucrative state business was steered to the B-Ds in exchange for luxury gifts, lavish vacations, and tens of thousands of dollars spent on cocaine and prostitutes. The pension director, Kang, allegedly solicited and accepted these items of value from the other two defendants, and reciprocated by engaging them/their firms to handle approximately $2-$3 billion in commission-generating fixed income securities trades for the fund. In abrogation of his fiduciary duty, Kang allegedly did not disclose any of this to the fund, and the other defendants allegedly took steps to help keep the secret.