Placement Agents Expelled From School

New York State Teachers’ Retirement System has adopted New York State Attorney General Andrew Cuomo’s new Public Pension Code of Conduct, but it won’t change much at the pension system. That’s because Nystrs, which manages $68 billion in assets, already has some fairly stringent guidelines in place to keep a check on corruption and militate against conflicts of interests for its trustees.

Nystrs already prohibits trustees or employees from receiving gifts of more than nominal value from managers seeking to do business with the fund. It also prohibits its investment managers from hiring a former trustee or employee for two years after the person leaves the system in most instances. And because none of its current trustees are elected officials, the provisions in the code of conduct

That prohibit campaign contributions from investment managers isn’t applicable, although the pension system has embraced them anyway. One aspect of Cuomo’s code of conduct that will require change at Nystrs is a ban on the use of placement agents or third-party intermediaries by fund managers to secure commitments from the system.

“NYSTRS staff will communicate directly with General Partners and principals of the fund or manager interested in doing business with the System,” the statement said. Cuomo revealed the code of conduct for public pension funds last week in connection with a $20 million settlement with the Carlyle Group over the private equity firm’s role in a kickback scandal involving the New York State Common Retirement Fund.