N.J. Took Into Account Ongoing Probes, Other Issues in RFQ Process

New Jersey's Treasury Department yesterday said its recent selection of six investment bidding agents took into account different qualifications and issues with each company, including details of any ongoing investigations and subpoenas related to anti-competitive practices.

The state's new pool of investment bidding agents includes three companies that have received subpoenas or document requests in a widespread investigation of possible bid rigging regarding state and municipal investments.

Treasury officials announced earlier this week the six selected companies are Public Financial Management Inc., First Southwest Co., CDR Financial Products Inc., Acacia Financial Group Inc., Lamont Investment Advisors, and Sound Capital Management Inc.

In late July, Florida Attorney General Bill McCollum requested information from First Southwest, CDR Financial, and Sound Capital in a civil investigation of potential anti-trust activities.

Almost two years earlier in November 2006, the Federal Bureau of Investigation raided CDR Financial's Beverly Hills, Calif., office and Sound Capital's office in Eden Prairie, Minn., in its probe of investments connected to municipal bonds.

At the same time, the Securities and Exchange Commission and the Department of Justice subpoenaed First Southwest as part of its investigation of alleged price-fixing in the municipal industry.

"First Southwest Co. is cooperating fully in providing requested documents and information," Hill Feinberg, the firm's chairman and chief executive officer, said via e-mail.

CDR Financial and Sound Capital did not respond to phone and e-mail requests for comment.

The state and federal requests of documents and subpoenas are one factor among many that New Jersey officials considered in their selection process, according to Treasury spokesman Tom Vincz.

"There are several questions and several categories in the [request for proposals] that the committee reviews and evaluates and makes recommendations on, and that question was among the questions in the RFP process," Vincz said.

In its search, the state indicated that it was looking for firms with bidding agent experience on at least three transactions with a government entity that involved the investment of at least $100 million in proceeds in open-market Treasury securities, U.S. agency securities, or guaranteed investment contracts, according to the RFQ. Selection criteria included expertise, capacity, personnel, service to New Jersey, and proposed fees.

In response, the state received 10 submissions, with the three-member selection committee designating the six top-scoring firms for the new investment bidding pool.

PFM received the highest score with 2,540 points out of a possible 3,000 points. First Southwest followed with 2,520 points, CDR Financial with 2,360 points, and Acacia Financial with 2,285 points. Lamont and Sound Capital tied with 2,265 points, which increased the proposed five-member pool to six companies.

Treasury officials will utilize the selected companies on a rotating basis beginning with PFM and moving down the list. The pool is set for one year and the state has the option of renewing the group for up to two additional years.

The four remaining respondents include Columbia Capital Management LLC with 2,170 points, Grant Street Group with 2,065 points, Fairmount Capital Advisors Inc.with 2,045 points, and P.G. Corbin & Co. with 1,905 points.

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