Blackstone CEO Stephen Schwarzman is defending the use of placement agents by private-equity firms. In a letter posted on the SEC website, Schwarzman explains the role they played in helping establish his first private-equity fund. Bloomberg reports:
"Without the assistance of CS First Boston and Bankers Trust, I can assure you that our fundraising efforts for our first private-equity fund would have utterly failed," Schwarzman wrote of the predecessor of Zurich-based Credit Suisse Group AG. "Blackstone would have been a very different firm today and may not even have survived at all."
As we reported earlier this summer, placement agents have come under intense scrutiny by the SEC and New York Attorney General Andrew Cuomo because of their ties to state and local pension funds. The SEC is currently considering a proposal that would ban placement agents from representing clients before state and local pensions.