As reported by a variety of news outlets, including The Wall Street Journal, a former portfolio manager for the state pension fund of New York was hit with a variety of charges on Wednesday by the federal government in connection with his alleged acceptance of bribes from brokers who wanted a hand in investing fund assets.
Navnoor Kang, a former portfolio manager at the New York State Common Retirement Fund, was arrested at his apartment in Portland, Ore. Securities fraud, wire fraud, and obstruction of justice are just a few of the charges he is facing.
The selection of the firms charged with the responsibility of investing or trading the assets of public pension funds is serious business, and those responsible for managing that process, like Mr. Kang, are supposed to be making the decisions based entirely on the performance of said firms.
The Journal points out that this kind of corruption has remained a problem for pension funds due to the large number of money management firms engaged in fierce competition for the opportunity to invest a portion of the massive asset bases.
According to the charges, Kang received a variety of gifts in exchange for directing pension fund assets to two firms, Sterne Agee and FTN Financial. The bribes took a variety of forms, including expensive vacations, tickets to major sporting events and Broadway shows, visits to strip clubs, cocaine, and even cash for prostitutes.
For their part in the bribery of Kang, two brokers, one from each of the firms, have been arrested. Gregg Schonhorn, a former vice president at FTN Financial, has been cooperating with authorities since pleading guilty on Dec. 15, while Deborah Kelley, a former managing director at Sterne Agee, surrendered to authorities in San Francisco.
By Robert G. Yetman, Jr. Editor At Large