Carlyle Probed Over Business With New York Pension Fund

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New York Attorney General Andrew Cuomo and SEC lawyers are investigating Carlyle, hedge funds and other private-equity firms that did business with New York’s employee pension fund, according to the person, who declined to be identified because the probe isn’t public.

“Carlyle has fully cooperated with the New York Attorney General’s investigation,” Christopher Ullman, a spokesman for Washington-based Carlyle, said today in a phone interview. “We understand this is an industry-wide investigation and that we are not the focus.”

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Since 1987, the board's investment has grown to about $3.5 billion in these and other leveraged buyout funds, distressed debt and venture capital pools, a category called "alternative" investments. A top performer has been an investment pool managed by the Carlyle Group, a sought-after manager with which Jeb Bush's father has connections. The state board's alternative investments as a whole, though, have fallen short of their goal every year (but haven't lost money overall).

Venturing out
Stipanovich says "the verdict is still out" on alternative investments, which take time to pay off, but "I'm still convinced it's the right thing to do." He says he added more outside managers to diversify the investments and spread the risk.

Publicity-shy Stipanovich, who says "we want to be in the back row of the classroom and hope we don't get called on," did make one political foray last year. He joined Jeb Bush and representatives of Enterprise Florida and the Scripps Research Institute to promote venture capital in Florida. "The venture capital community," he told the group, "has been asking, 'If Florida venture capital is so great, why aren't the Florida pension funds invested?' " He promised to put another $500 million over three to five years into venture capital, but not necessarily Florida venture capital firms.

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