Thu, Oct 14, 2010, 2:28PM EDT - U.S. Markets close in 1 hr 32 mins
By MICHAEL J. de la MERCED
On Tuesday night, Steven L. Rattner was surrounded by an assemblage of stars from the financial and media worlds at the Four Seasons restaurant in Manhattan. Chief executives and powerful politicians had gathered to celebrate his new book on the restructuring of the American auto industry.
Few if any of the guests sipping sauvignon blanc and snacking on crab cakes could have guessed that Mr. Rattner was near a settlement with the Securities and Exchange Commission over illegal kickbacks to New York State pension fund officials.
In many ways, the high-wattage at the party traced the career arc of Mr. Rattner, 58, who has been a financial reporter, an esteemed media investment banker, a highflying private equity executive and a member of the Obama administration.
Many believed that Mr. Rattner had set his sights even higher - to become Treasury secretary in a Democratic administration. If he held such national ambitions, they have now likely been vanquished by a scandal involving corruption at the New York state pension fund.
The legal morass has ensnared Mr. Rattner for the last 18 months. A settlement with the Securities and Exchange Commission, including a multiyear ban from the securities industry and a multimillion dollar fine, over illegal kickbacks to officials at the New York State pension fund may be announced as soon as Thursday.
The scandal involved associates of Alan Hevesi, former New York State comptroller. Mr. Hevesi and others have pleaded guilty to charges that private equity executives paid for access to pension fund officials. The investigations, by the S.E.C. and Attorney General Andrew M. Cuomo of New York, have tarnished others in the private equity industry, including the Carlyle Group and the firm Mr. Rattner helped found, the Quadrangle Group, which have settled charges.
They have also changed the way these firms solicit business from big pension funds, eliminating a sometimes shadowy world of informal middlemen that arrange meetings between potential investors and investment funds. The New York State and City pension funds now forbid the use of agents who connect officials with investment firms, though the practice continues in other parts of the country.
And the impact of the so-called "pay to play" investigations has reached far beyond New York and Quadrangle. On Tuesday, the California Public Employees Retirement System cut ties to the Pacific Corporate Group, another firm that has settled charges with Mr. Cuomo.
But few buyout figures were as affected as Mr. Rattner, who while at Quadrangle helped distribute a film produced by the New York pension fund's chief investment officer. Mr. Rattner had long been the most prominent target of the investigations, which continued after he left Quadrangle last year to join the Obama administration.
Raised on Long Island, Mr. Rattner graduated from Brown University in 1974. He became a reporter at The New York Times in its Washington and London bureaus. He then left journalism to pursue banking, moving from Lehman Brothers to Morgan Stanley and then Lazard as an investment banker.
Along the way, he became known as a top-flight mergers and acquisitions expert who specialized in media companies, brokering deals on behalf of companies like Viacom and Comcast. Vanity Fair once described Mr. Rattner as "the most talked about investment banker of his generation," a smooth negotiator whose advice won the confidences of moguls like the telecom entrepreneur Craig McCaw and Brian L. Roberts, the chief executive of Comcast. His parties at his homes on Fifth Avenue and Martha's Vineyard, which drew the likes of Charlie Rose and Charles Schumer, were often the buzz of the town.
He also rose as high as Lazard's deputy chief executive, though he clashed frequently with Felix G. Rohatyn, the firm's senior deal-maker.
But Mr. Rattner left in 2000 to pursue yet another career change, banding together with three other Lazard partners to form Quadrangle. While there, he pursued leveraged buyouts of media companies like the takeovers of Metro-Goldwyn-Mayer and most of the American titles of Dennis Publishing, including men's magazines like Maxim and Stuff. (Some of those investments have faltered; M.G.M. is close to filing a prepackaged bankruptcy that will wipe out its equity holders, including Quadrangle.)
Mr. Rattner had also sought to gain influence in the Democratic Party, giving millions of dollars to candidates like Hillary Rodham Clinton and Barack Obama. His appointment as the White House's car czar, in charge of its ambitious plan to reorganize General Motors and Chrysler, was in part the culmination of years of hosting fund-raisers and writing opinion articles on economic issues in major newspapers.
After assiduously working his way up the New York media and financial worlds, Mr. Rattner drew an elite crowd on Tuesday night. Among the guests at Tuesday's book party were Henry R. Kravis of Kohlberg Kravis Roberts, Millard S. Drexler of J. Crew and Tina Brown of The Daily Beast.
His closest friends include the co-hosts of his book party, Mayor Michael R. Bloomberg of New York City and Arthur Sulzberger Jr., the publisher of The New York Times, as well as Mr. Roberts of Comcast.
Peter Lattman contributed reporting.
Go to Related Article from The New York Times>>
See all RSS links
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page.Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.
Fundamental company data provided by Capital IQ. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fundAnalyst estimates data provided by Thomson Financial Network. All data povided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon.
Read Full Article »