Wetherly settles with Cuomo, exits placement business

The Los Angeles-based firm will pay $1m to the New York Common pension fund and has agreed to exit the placement business.

Wetherly Capital Group has become the first placement agency to settle with New York Attorney General Andrew Cuomo, agreeing to pay more than $1 million in restitution to the state’s massive pension and ending the investigation against the firm.

The firm, based in Los Angeles, also agreed to exit the placement agent business, according to a statement from Cuomo. Wetherly also engages in investment banking and consulting work. Wetherly was unavailable for comment at press time.

Wetherly was allegedly paid placement fees from three private equity firms, and split the fees with undisclosed third parties, according to Cuomo. The case is one of many in Cuomo’s massive investigation into pension pay-to-play practices that have rocked the private equity industry.

Cuomo filed a 123-count indictment against Henry Morris, the former top political advisor of former New York Comptroller Alan Hevesi, and former New York State Common Retirement Fund Chief Investment Officer David Loglisci, as part of the investigation. Cuomo alleges Morris and Loglisci would push investment firms for fake finder’s fees in exchange for commitments from the $126 billion New York Common pension.

In the case of Wetherly, three private equity firms – Freeman Spogli, Levine Leichtman Capital Partners and Ares Management – paid Wetherly more than $1.3 million in placement fees, Cuomo said. Wetherly then paid $140,000 to Julio Ramirez, an unlicensed placement agent who was once affiliated with Park Hill, and $500,000 to Morris.

Wetherly also contributed a total of $14,000 to Hevesi’s re-election campaign.

To end the investigation against it, Wetherly agreed to pay $1 million to the pension and exit the placement business. The firm’s principals also signed up to Cuomo’s code of conduct for placement agents, which precludes them from interacting with US public pensions on behalf of investment firms.

Wetherly is the most recent in a slew of firms that have settled with Cuomo, paying the New York Common pension a total of $120 million. Other firms include Markstone Capital Group, The Carlyle Group, Riverstone Holdings, Pacific Corporate Group, Levine Leichtman Capital Partners and HM Capital Partners.

Seven people have been charged in Cuomo’s investigation, including Morris, Loglisci, Ramirez, Saul Meyer, founder of private equity advisor Aldus Equity and Barrett Wissman, a former hedge fund manager.