Kickback case goes L.A.

The LAT and WSJ are jumping on the L.A. angle to a developing scandal involving NY private equity firm Quadrangle Group. It sounds pretty byzantine, and when compared to some of the outrageousness played out in the financial markets, not all that significant. But investigators are sniffing around in several directions, so we'll see how that goes. In a nutshell, Quadrangle apparently did not disclose that it paid fees to the former firm of now-indicted political adviser Hank Morris for the purpose of arranging a $10 million investment from Los Angeles Fire and Police Pensions board. Last month, the NY AG's office and the SEC accused Morris of taking millions of dollars in kickbacks from firms looking to manage assets from New York's $122-billion public pension fund. From the Journal:

Mr. Morris acted as a so-called placement agent, or middleman, helping Quadrangle and other private equity funds secure public pension fund business. While the Los Angeles pension fund didn't require disclosure of placement agents at the time, Quadrangle did disclose two other placement agents that helped it on the same deal, the chief investment officer said.

Quadrangle is a very big deal because it was co-founded by Steven Rattner, head of President Obama's auto task force (and arguably one of the most powerful guys on Wall Street). But wait, there's more. The Times is reporting that Sean Harrigan and Elliott Broidy, who were appointed by Villaraigosa to serve on the pensions board, have been asked by the SEC to turn over documents regarding their sources of income over the last several years.

The SEC asked Harrigan and Broidy to identify any source of income greater than $10,000 since 2005 and any document showing communications they have had with four companies -- Aldus Equity, Wetherly Financial, StepStone Group and Pension Consulting Alliance Inc. -- or representatives of those companies. "For purposes of this request, 'document' includes, but is not limited to, memos, letters, e-mails, reports and notes of conversations," the letter states. All four companies have been involved, directly or indirectly, in investing assets for their pension board. At least three have direct or indirect ties to the New York probe.