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SEC presses Elliott Broidy for info in pension fund probe

By A. James Memmott

October 3, 2009 at 10:14am

Continuing to follow the money in the New York state pension fund investigation, the Securities and Exchange Commission has turned up the heat on a major Republican fundraiser and donor.

The Wall Street Journal reports that the SEC wants more records from Elliott B. Broidy, chairman and CEO of the Los Angeles-based Broidy Capital Management.

Elliott Broidy
Elliott Broidy

Broidy is connected to New York’s pension fund though Markstone Capital Partners, a private-equity firm that he heads, as Markstone manages some of the fund’s money.

The SEC and Andrew Cuomo, New York state’s attorney general, have alleged that investment firms made illegal payments to obtain some of the pension fund’s business.

Broidy, 49, has not been charged with a crime and it is unclear what involvement he might have in the ongoing case.

The SEC claims in papers filed in federal court in Los Angeles that Broidy has been slow in handing over documents from his firm and that he did not appear for testimony on Sept. 24.

A spokesman for Broidy said that the SEC has already received 38,000 documents from Broidy and that more are under preparation.

He added that Broidy is going to meet with a federal judge to make arrangements for his testimony.

The New York state pension fund was an early investor in Markstone, soon after Broidy created the firm in 2002.

The investment of $200 million or $250 million (reports vary) came a while after Broidy met with Alan Hevesi, then New York state’s comptroller and the overseer of the state pension fund.

Earlier, this year, Henry “Hank” Morris, an adviser to Hevesi, and David Loglisci, the former chief investment officer of New York funds were arrested on criminal charges.

The state of New York and the SEC allege that Morris and Loglisci received kickbacks from investment firms seeking the pension fund’s business. Hevesi has not been charged.

The charges in the case also involve the payment of “finder’s fees” to other people who allegedly connected investment firms with the pension fund managers.

In May, Broidy resigned as a trustee of the Los Angeles Fire and Police Pension Fund. The month before, the SEC had sent him a letter asking for financial disclosure forms he had filed with the state.

Among other material, the SEC asked Broidy for any documents he might have relating to finder’s fees paid to individuals for arranging investment activities with the Fire and Police fund.

A graduate of the University of Southern California, Broidy began his business career as an accountant with Arthur Andersen & Co.

He was managing director of Bell Enterprises, a private investment firm, from 1982 to 1991, when he founded Broidy Capital Management.

Broidy is a long-time contributor to Republican candidates and committees.

He raised at least $500,000 as a bundler for John McCain’s 2008 presidential campaign and at least $200,000 for George W. Bush’s 2004 campaign. In 2008, he also chaired the finance committee of the Republican National Committee.

Broidy and his wife, Robin, a former vice president of Twentieth Century Fox Home Entertainment International, have also made significant donations to a variety of Jewish philanthropies.

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