New York City Comptroller William C. Thompson, Jr announced today that trustees of the New York City Employees’ Retirement System (NYCERS) have unanimously agreed to immediately suspend the use of placement agents, firms and middlemen in investments with the New York City Pension Funds.

The action came a week after Thompson announced he would ask the five New York City Pension Funds to suspend the use of placement agents.

“The trustees and I believe that the best course of action at this time is to immediately suspend the use of placement agents involving private equity investments,” Thompson said. “The trustees recognize that this is the wisest course of action at this time, given the type of egregious conduct detailed in the recent indictment and felony complaint by the New York Attorney General and complaints filed by the Securities and Exchange Commission concerning the New York State Common Retirement Fund.”

Last week, Thompson asked the New York State Attorney General to look into whether the city retirement systems were “intentionally misled or deceived” as to the identities of any placement agents involved in an investment by the city systems in the Quadrangle Group. Thompson’s request was prompted by media reports indicating that Hank Morris and Searle & Company had received a placement fee.

The New York City Pension Funds invested $125 million in Quadrangle in 2005 and 2006, but at no time did the Pension Funds’ consultant ever identify Hank Morris or Searle & Company as a placement agent in that transaction. In fact, in a due diligence questionnaire issued by the Pension Funds’ consultant, Quadrangle identified Monument Group and Helix Associates Limited as the only placement agents.

The New York State Comptroller last week announced a similar ban on placement agents, and other large public pension funds across the nation are considering similar actions. Thompson and his office plan to ask the other four New York City Pension Funds to approve a similar suspension in the coming weeks.

Trustees of the Pension Funds include Mayor Bloomberg, his commissioners, and representatives and appointees from labor unions. The funds are the: New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and Board of Education Retirement System.

The Comptroller serves as a member of the Board of Trustees of four of the five Funds and is investment advisor to, and custodian of, the five. The Funds cover more than 237,000 retirees and beneficiaries and more than 344,000 City and City-affiliated employees. The Funds have combined assets of more than $82.5 billion as of December 31.

The Comptroller said the Pension Funds’ assets are invested for the benefit of the plan participants and their beneficiaries. All assets of the Pension Funds are managed by registered investment advisors.

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