Goldman Sachs fined about $16 million for pay-to-play scheme involving former Cahill aide
Goldman Sachs has been fined about $16 million in what regulators are calling a pay-to-play scheme involving a former vice president, a close political associate of former state Treasurer Timothy P. Cahill, who landed the firm a $445.9 million bond deal with an agency Cahill oversaw.
In a negotiated settlement with the Securities and Exchange Commission, the financial giant agreed to pay nearly $12 million after agreeing to charges that its former vice president Neil Morrison, who previously had served as deputy treasurer to Cahill, was raising money for Cahill’s gubernatorial campaign at the same time that he was negotiating the bond deal with a state water pollution control board.
Attorney General Martha Coakley also announced Thursday that she negotiated a settlement with the firm in which it will pay just over $4 million fine on the same charges. Coakley brought indictments against Cahill last spring for his use of $1.5 million in state lottery funds to boost his 2010 gubernatorial candidacy. A trial has been scheduled for Oct. 29.
In a statement issued by Goldman Sachs, the company said it was pleased the investigations had been resolved.
“We detected Morrison’s activities, promptly alerted regulators, terminated his employment, and fully cooperated with the investigations,” the statement reads. “We accept responsibility for the consequences of his unauthorized actions under the terms of the settlements announced today.”
The Globe first reported the details of Morrison’s bond deal in June 2010. His deep involvement in working for Cahill’s political campaign emerged months later in a series of internal emails at the treasurer’s office that the newspaper obtained. While the announcement today ends the investigation into Goldman Sachs’s legal liability, there was no mention of Morrison’s standing in the investigation. He did not respond to calls seeking comment this week.
Morrison was fired by Goldman Sachs in December 2010 due to “loss of confidence involving outside activities without prior approval.”
The $12 million fine is the largest ever imposed by the SEC for violations under the Municipal Securities Rulemaking Board pay-to-play violations.
“The pay-to-play rules are clear: municipal finance professionals that use their firm’s resources to campaign on behalf of political candidates compromise themselves and the firms that employ them,” said Robert Khuzami, director of the SEC’s Division of Enforcement in a statement.
The SEC’s press release cited e-mails that Morrison sent to a deputy treasurer in Cahill’s office to back up its case.
In one, sent in June 2010, Morrison emphasizes to the unnamed deputy treasurer how important it is for him to land the underwriting contract for the bond deal on behalf of his company.
“From my standpoint as an advisor/consultant/friend I am saying, PLEASE don’t give these [underwriter] slots away willy-nilly. You are in the fight of your lives and need to reward loyalty and encourage friendship. If people aren’t willing to be creative with their support then they shouldn’t expect business. This has to be a political decision.”
E-mails show that Morrison, at this same time, was helping Cahill to raise money, writing his speeches, and even interiewed one potential running mate.Frank Phillips can be reached at email@example.com.