Bear Stearns

Carlyle Group To Pay $20 Million, Submit To Cuomo's "Code Of Conduct"

Moe Tkacik | May 14, 2009, 4:06PM

In what New York AG Andrew Cuomo is hailing as a "revolutionary" agreement, Carlyle Group agreed to pay a $20 million settlement to "resolve its involvement" in former New York state comptroller adviser Hank Morris's alleged scheme to collect bribes from hedge funds and private equity firms in exchange for state pension fund investments. As part of the deal Carlyle will agree to Cuomo's new code of conduct banning the use of "placement agents" like Morris, who allegedly collected $13 million in sham fees from Carlyle for steering $730 million in state pension fund investments to the firm.

Carlyle admitted no wrongdoing and announced it was suing Morris and the firm he worked for, Searle & Co., for $15 million. The code of conduct could indeed prove pretty revolutionary in the industry if Cuomo succeeds in making similar settlements with other money managers, which he said was his intention. Whether it marks a considerable change at Carlyle is another matter; after all, if you can name one politically-connected private equity firm it is probably the Carlyle Group.

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