Markstone coughs up $18m for role in NY pension scandal

Disgraced Broidy left the firm at the end of last year having pled guilty to one count of rewarding official misconduct.

The shamed chairman admitted paying $1m to officials at the New York State Common Retirement Fund in return for a $250m commitment to Markstone Capital’s Israel-focused venture capital fund.

Markstone has agreed to make an $18m payment to the New York State Common Retirement Fund over the next three and a half years as a result of its previous affiliation with Broidy. The fee is effectively a reimbursement of management fees paid to the venture firm by the pension fund.

The agreement and payment, which will not impact on investors’ money, is similar to the civil agreements made by other private equity firms such as Carlyle and Riverstone who were also caught up in the scandal.

"Markstone's agreement with the Attorney General enables us to move forward with our core business, which is investing in Israeli companies." said Ambassador Dan Gillerman, Markstone's new chairman and Broidy’s successor.

The Israel-focused venture capital firm will adopt the Attorney General's code of conduct which applies a new standard for ethics in the private equity industry. This code bans investment firms from hiring, utilising, or compensating placement agents, lobbyists, or other third-party intermediaries to communicate or interact with public pension funds to obtain investments.

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