By Monte M. Korn
The following column includes excerpts from articles titled “Rattner Sued Over Alleged Kickbacks” by Greg Gardner of the Detroit Free Press and “Suit Seeking Wall Street Ban Spoils Ex-Car Czar’s Big Day” by Michael Corkery and Michael Rothfeld of the Wall Street Journal.
“New York Attorney General and Gov.-elect Andrew Cuomo today sued Steven Rattner, former head of President Barack Obama’s auto task force, alleging he paid kickbacks to secure $150 million of state pension investments in his former firm Quadrangle Group.
“Cuomo is seeking more than $26 million from Rattner, as well as a lifetime ban from the securities industry in New York.
“The action’s timing was awkward, coming on the day the government sold its first shares of General Motors. Rattner led the team of Treasury officials, lawyers and investment bankers that crafted the automaker’s restructuring.
“Steven Rattner began [last] Thursday basking in the glow of a job well-done, as the one-time auto czar watched General Motors Co. emerge from a government bailout to be warmly received by the stock market again.
“Then, a nemesis took the shine off the day: New York Attorney General Andrew Cuomo sought to ban Mr. Rattner, a Wall Street star, from the securities industry in New York for the rest of his life. And Mr. Cuomo filed two lawsuits seeking to collect $26 million from him.
“The suits—alleging that Mr. Rattner used special favors to win a $150 million investment from the state pension fund—were announced minutes after Mr. Rattner, who helped engineer the government-backed rescue of GM, concluded an early-morning CNBC appearance to celebrate the auto maker’s $18.1 billion initial public offering.
“The back-and-forth was the latest in a legal skirmish that has turned venomous. It pits Mr. Rattner, a stalwart of Manhattan’s Democratic elite who manages the personal fortune of New York City Mayor Michael Bloomberg, against Mr. Cuomo, the state’s Democratic governor-elect.
“‘Filing a lawsuit on the day of the GM IPO out of 500 days of investigating further demonstrates that the attorney general puts politics and his own media coverage ahead of the public interest,’ said a spokesman for Mr. Rattner.
“Richard Bamberger, a spokesman for Mr. Cuomo, fired back at the newspaper-reporter-turned-financier: ‘Mr. Rattner now has a lot to say as he spins his friends in the press, but when he was questioned under oath about his pension fund dealings, he was much less talkative, taking the Fifth and refusing to answer questions 68 different times.’ His office said the suits’ timing was a coincidence.
“Around the time Mr. Cuomo’s office announced the suits, the Securities and Exchange Commission announced a less severe settlement with Mr. Rattner over the pay-to-play allegations, which includes him paying $6.2 million and a two-year ban from associating with any investment adviser or broker dealer.
“Both SEC and New York officials have been investigating former New York Comptroller Alan Hevesi’s office and a former political adviser for essentially selling access to New York’s $125 billion Common Retirement Fund, one of the country’s largest pension funds.
“In its lawsuit, the SEC alleged that Mr. Rattner secured investments for his former firm, Quadrangle Group LLC, after he arranged for a firm to distribute a low-budget film that was produced by David Loglisci, the retirement fund’s chief investment officer, and his brother.
“Mr. Rattner settled the SEC case without admitting wrongdoing. ‘I will not be bullied simply because the Attorney General’s office prefers political considerations instead of a reasoned assessment of the facts,’ Mr. Rattner said in a statement, adding he intends to fight the lawsuits.
“’This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity.’
“Mr. Cuomo hasn’t charged Mr. Rattner with any crime.
“Mr. Rattner is a close friend of New York Mayor Michael Bloomberg.”
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Monte M. Korn is an attorney practicing law in West Bloomfield, has been a member of the State Bar of Michigan since 1942, and is a member of the Probate and Elder Law Sections of the State Bar.
Monte Korn is the talk show host of “Open Line with Monte Korn” on radio station WNZK am690 every morning at 11 a.m. He can be reached at (248) 933-4334.
The material in the above article is the research of Monte M. Korn. The Detroit, Oakland County, and Macomb County Legal Newspapers have no responsibility therein.
