The trustees of all five New York City pension funds have voted to ban placement agents across all investment classes effective immediately, Comptroller Scott Stringer announced Monday.
Previously, city pension funds, valued at roughly $154 billion, only prohibited such placement agents for private equity investments.
Stringer called for such a ban in January, shortly after taking office, as part of a six-point overhaul for operations within the Bureau of Asset Management, which operates within the comptroller's office.
Stringer on May 29 named 27-year TIAA-CREF veteran Scott Evans chief investment officer for the pension funds.
"The passage of an ironclad ban on placement agents for all transactions involving the New York City pension funds was long overdue," Stringer said in a statement. "Ending the involvement of intermediaries in pension funds' transactions will ensure that the integrity and independence of our investment decisions are beyond reproach and without conflict."
Placement agents act as middlemen to connect asset managers and investors.
Their use was central to a pay-to-play scandal involving former city and New York State Comptroller Alan Hevesi, who pleaded guilty in 2010 to accepting nearly $1 million in benefits from Elliott Broidy, a principal of Markstone Capital Partners LP, in return for approving a $250 million investment in the firm from the state pension fund.
Gifts included travel expenses, a sham consulting agreement with a friend of a political adviser, and campaign contributions.
Hevesi was paroled in December 2012 after serving 20 months of a maximum four-year sentence.
Stringer, a former Manhattan borough president and state assemblyman, serves as the investment advisor, custodian and trustee of the pension funds. They 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 the Board of Education Retirement System.
The Board of Education system was the last to approve the ban, late last week.
Each pension fund is financially independent of the others, and has its own board of trustees. The funds invest in a variety of asset classes.
U.S. equity and fixed income account for 41% and 30% of pension fund asset allocation as of March 31. International equity amounts to 17% with the remainder divided among private equity, private real estate, hedge funds and cash.
Moody's Investors Service rates the city's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
