Former Obama car czar Steven Rattner has agreed to pay $6.2 million to settle federal charges over his role in a "pay-to-play" scandal, but says he won't be "bullied" into accepting a harsher penalty from New York's attorney general.
The Securities and Exchange Commission announced Thursday that Rattner had accepted the fine and a two year ban from the securities industry to resolve allegations that he paid illegal kickbacks to help his private equity firm land a lucrative investment from a state pension fund.
Similar settlement talks with state officials collapsed, however, and on Thursday New York Attorney General Andrew Cuomo filed two lawsuits seeking a much tougher punishment: at least $26 million and a lifetime ban from the securities business.
Rattner expressed outrage over that demand in a statement e-mailed to reporters.
"While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General's office prefers political considerations instead of a reasoned assessment of the facts," he said.
He said he did not violate the state securities law that gave Cuomo the authority to intervene in the case.
"This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity - and I certainly did not violate the Martin Act," he said. "That's why I intend to clear my name by defending myself vigorously against this politically motivated lawsuit."
Both federal and state investigators have accused Rattner of greasing the palms of state officials and their associates in order to help his private equity firm, the Quadrangle Group, land about $150 million in pension fund investments.
In its complaint, the SEC said Rattner arranged for a film distribution company owned by Quadrangle to distribute a low-budget movie produced by the pension fund's chief investment officer and his brothers.
He also hired the top political consultant to then-state Comptroller Alan Hevesi as a "placement agent" on the investment deal. The SEC said the arrangement resulted in the consultant, Henry Morris, being paid more than $1 million in "sham fees."
Rattner also arranged to have an associate make $50,000 in contributions to Hevesi's re-election campaign, according to the SEC.
Hevesi has pleaded guilty to criminal charges in connection with the case, and a number of securities executives and firms, including Quadrangle, have paid many millions of dollars in penalties.
Rattner, a major political fundraiser for Democrats and influential policy figure, left the firm last year to become co-leader of the White House task force that restructured General Motors and Chrysler. He left the government in July and has been promoting his new book on the auto industry since.
The money Rattner is paying to settle the charges represents a fraction of his wealth. He reported net worth last year of between $188 million and $608 million. But banning him from the industry, even a temporarily, could greatly limit his earning potential