I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
Hmm, all the state officials who’ve pleaded ignorance about the hefty fees third-party marketers were paid over the years because of their involvement in state investments may have only themselves to blame.
Tom Cole of the Albuquerque Journal tells us today that in the aftermath of the 2005 state treasurer scandal a policy was drafted that called for public disclosure of fees paid to so-called third-party marketers on government investment deals.
For whatever reason the policy wasn’t adopted by the State Investment Council and other state investment agencies. And now we’re swimming in a scandal where the public is suddenly finding out about the millions paid out to third-party marketers involved in state investments.
Here’s an excerpt from Cole’s report in which he explains the history of the proposed policy:
The story of how the public was kept in the dark on the extent of the fees dates back to the indictments in 2005 of Robert Vigil, then the state treasurer, and Michael Montoya, who preceded Vigil as treasurer.
Shortly after the indictments, Richardson announced a review of government investment practices.
The Governor’s Office put together a group of representatives from state investment agencies, and the group’s recommendations made in 2006 became known as the Governor’s Transparency Policy.
The policy — a little over a page long — dealt with selection of outside money managers and advisers, reporting and disclosure of fees paid to brokers, securities trading and more.
Under the policy, agencies that made investments in alternative assets were to gather data on fees paid by investment firms to third-party marketers, report the data quarterly to the agencies’ governing boards and make the data publicly available.
The agencies that make investments in alternative assets are the State Investment Council, the Educational Retirement Board and the Public Employees Retirement Association.
Fast forward a few years, and you know if you’ve followed New Mexico news in recent months, the millions racked up by third-party marketers involved in the state investing taxpayer money in private equity and hedge funds have generated headlines, and how.
In fact, the money paid out has morphed into a scandal competing head on for news space with the federal investigation into pay-to-play allegations involving the New Mexico Finance Authority and CDR Financial Products, a California firm that gave money to two political committees Richardson started.
That’s due in part, as Cole notes, the sudden federal interest in third-party marketers in New Mexico. Federal prosecutors have subpoenaed documents from both the State Investment Council and the Educational Retirement Board.
Third-party marketers, until recently, were obscure figures in the investment world who acted as matchmakers between private investment funds and states looking for a good return on their money.
But with the release of two documents — one from the State Investment Council, another from the Educational Retirement Board — the public has seen not only how much money was involved, but also who was involved.
And one name, in particular, has grabbed the most attention: Marc Correra.
Correra, the son of a friend and fundraiser for Gov. Bill Richardson, shared in the $16 million or so in finders’ fees as a third-party marketer on dozens of state investment deals involving the State Investment Council and Educational Retirement Board over the past half-dozen years.
One investment for which Correra shared in $2 million in fees involves Chicago-based Vanderbilt Financial Trust, according to an Educational Retirement Board document. The state lost its $90 million investment in that deal.
In writing about this unadopted policy, Cole reports what is likely a universal experience for reporters who have followed this story. And that is the caught-off-guard comments from state officials. Officials have repeatedly said what third-party marketers were making during the go-go years of Wall Street wasn’t really on their radar. They were more interested in the return the state was getting on their investments, which is justifiable given their fiduciary duty. But some would argue that that financial vigilance is not at odds with transparency.
So it is very interesting to learn that the state had a policy ready to go that was never adopted.
Very interesting, indeed.
