Skip to content
Blog

SEC Charges 3 with Pay-to-Play Fraud on NY Pension Fund

One question that is constantly on the mind of a potential SEC whistleblower or an SEC whistleblower lawyer is whether the SEC will be interested in their case.  While there is no way to guarantee anything, some insights can be gained by looking at the kinds of cases that the SEC has brought in the past.

On category of cases that the SEC investigates are securities frauds involving public pension funds.  In this post, I will discuss a case that the SEC brought recently involving a public pension fund.

In prior posts, I have discussed cases that the SEC has brought for violations of:

  • the Foreign Corrupt Practices Act (FCPA).  See posts here and here
  • undisclosed markups and misleading pricing.  See post here
  • anti-money laundering regulations.  See post here

I have also previously written about areas of heightened attention identified by the SEC’s Chief of Staff (see post here), and types of cases that the SEC listed in a press release (see post here).

A pay-to-play fraud involving the New York State Common Retirement Fund

A few days before the holidays, the SEC filed charges against a former official of the New York State Common Retirement Fund (NYSCRF) and two brokers.  The NYSCRF is the third largest public pension fund in the United States.

The former official was hired as the NYSCRF’s Director of Fixed Income.  In this role, he had the responsibility for investing approximately $50 billion of the Fund’s assets.  Officials in similar positions will often contract with brokers or investment firms to do the actual investing for them.

When brokers or investment firms give money or gifts to the official in order to beat out their competitors and win the public pension fund’s business, this is called “pay-to-play”.  “Pay-to-play” is another way of saying “bribery”.

In the NYSCRF case, the SEC charged the official and the two brokers with engaging in an illegal pay-to-play scheme.

SEC vs navnoor

According to the SEC’s court Complaint, the two brokers gave the official the equivalent of at least $160,000 in “benefits” to win the NYSCRF’s business.  Among the “benefits” that they allegedly gave to the official, and that the official accepted, were:

  • Over $50,000 for hotel rooms in New York City, Montreal, Atlantic City, and Cleveland
  • Approximately another $50,000 for restaurants, bars, and lounges
  • $17,400 for a luxury watch for the official
  • $4,200 for a Hermes bracelet for the official’s girlfriend, at the official’s request
  • $6,000 for VIP tickets to a Paul McCartney concert in New Orleans
  • a ski vacation in Park City, Utah, including a $1,000 per night suite
  • tickets to sporting events
  • entertainment at strip clubs
  • and “tens of thousands of dollars” in cocaine and “services from prostitutes”

In return, the two brokers won up to $2.5 billion in business from the NYSCRF.  This business earned “millions of dollars in commissions” for the two brokers.

In addition to the SEC’s lawsuit against the official and the two brokers, the U.S. Attorney’s Office has also filed criminal charges against them.

Comments by SEC officials

In a press release about the case, the Chief of the SEC Enforcement Division’s Public Finance Abuse Unit explained that “rather than compete fairly for business” from the NYSCRF, the two brokers “bribed their way in, lining their pockets with millions in commissions along the way.”

With regard to the NYSCRF official, the Director of the SEC’s Enforcement Division declared “This action demonstrates that the SEC will not tolerate public officials who abuse public pension funds to satisfy their own greedy and wanton desires.”

* * *

About the Pickholz Law Offices LLC

The Pickholz Law Offices LLC is a law firm that focuses on representing clients involved with investigations conducted by the U.S. Securities and Exchange Commission, FINRA, and other securities regulators.

The Pickholz Law Offices has represented employees, officers, and others in SEC whistleblower cases involving financial institutions and public companies listed in the Fortune Top 10, Top 20, Top 50, Top 100, Top 500, and the Forbes Global 2000. We were the first law firm ever to win an SEC whistleblower award for a client on appeal to the full Commission in Washington. Inside Counsel magazine named this achievement one of the five key events of the SEC whistleblower program. Examples of the Firm’s SEC whistleblower cases are available here.

In addition to representing SEC whistleblowers, since 1995 the Firm’s founder, Jason R. Pickholz, has also represented many clients in securities enforcement investigations conducted by the SEC, FINRA, the U.S. Department of Justice and US Attorney’s Offices, State authorities, and more. Examples of some of the many securities enforcement cases that Mr. Pickholz has been involved with are available here.

You can see what actual clients have had to say about The Pickholz Law Offices by going to the Client Reviews page on our website or by clicking here.

How to Contact the Pickholz Law Offices LLC

If you would like to speak with a securities lawyer or SEC whistleblower attorney, please feel free to call Jason R. Pickholz at 347-746-1222.

The Pickholz Law Offices remains open and will be fully operational through teleworking while we all grapple with this terrible pandemic. We hope that all of our clients, colleagues, friends, and their families remain safe and healthy. Our thoughts and prayers go out to everyone who has been affected by COVID-19.


Pickholz Law Logo
Jason Pickholz - pickholzlaw.com

The Pickholz Law Offices represents U.S. and international clients in securities and white collar cases. The Firm has helped whistleblowers report frauds to the SEC, CFTC, and IRS, and has defended clients in investigations by the SEC, CFTC, DOJ, FINRA, and other financial and securities enforcement regulators.

The Firm’s founder, Jason Pickholz, is the author of the two-volume book Securities Crimes, has appeared on tv and radio, and has taught continuing legal education courses. A former BigLaw partner, he has been representing clients in financial and securities fraud cases since 1995. In recognition of his many achievements, Mr. Pickholz was elected by his legal peers to be a Fellow of The New York Bar Foundation, an honor limited to just 1% of all attorneys in the New York State Bar Association.

Mr. Pickholz has been counsel in many high-profile cases. He was the first attorney ever to win an SEC whistleblower award on appeal to the Commission, which Inside Counsel magazine called one of the five key events in the history of the SEC whistleblower program. On the defense side, Mr. Pickholz has defended clients in the SEC’s COVID-19 investigations, the CFTC’s cryptocurrency cases, and a former US Senator, among others.

If you want to speak with a CFTC, IRS, or SEC whistleblower lawyer, or with a white collar defense lawyer, you can call the Firm at 347-746-1222.

The above information is not and should not be construed as providing legal advice. It is not and should never be considered as a substitute for consulting with your own lawyer. The use of this web site or this page does not constitute or create any attorney-client, fiduciary, or confidential relationship between The Pickholz Law Offices LLC and anyone using this web site, or anyone else. The information contained on this website is for informational purposes only. The content of this web site may not reflect current developments. Prior results do not guarantee a similar outcome. Results of prior cases or matters contained on this web site are not indicative of future results or outcomes, and should not be taken as a prediction, promise, or guarantee of any future result or outcome. No one who accesses this web site should act or refrain from acting based on anything contained on this web site. For additional terms-of-use and conditions governing the use of this web site, please view our full Terms and Conditions.