Money manager for state pension settles SEC complaint for violating ‘pay-to-play’ rule

PROVIDENCE – Gov. Gina M. Raimondo is cited indirectly in a federal complaint against an investment advisory firm that handled state pension money when she was state treasurer and later made a contribution to her campaign for governor in 2014.

The complaint against Oaktree Capital Management, lodged Tuesday by the U.S. Securities and Exchange Commission, does not name Raimondo. However, it vaguely refers to her role in an alleged violation by Oaktree of a federal “pay-to-play” rule that bans money managers from making political contributions to officials who have sway over which firms get to manage investments from state pension funds.

Wednesday, Raimondo’s office said she returned the contribution, and took steps when she was treasurer to prevent the state’s investment advisers from making political contributions.

“In fact,” a statement from her office reads, “she was the first treasurer to require investment advisers to sign a pledge” not to make such contributions.

- Advertisement -

The case goes back to October 2011, the SEC complaint states, when Raimondo was general treasurer and on the board of the State Investment Commission, which decided to invest $20 million in a fund handled by Oaktree.

Nearly three years later, on Sept. 15, 2014, according to the SEC, a “covered associate” of Oaktree made a $1,000 campaign contribution to Raimondo when she was running for governor. Sometime after that date, it states, the contribution was returned to the associate.

Oaktree, which is based in Los Angeles, also was accused of similar violations involving contributions to candidates for elected office in California. The firm has agreed to pay a $100,000 federal fine to settle the case.

According to the SEC, Oaktree violated the Investment Advisers Act when it was paid to provide advisory services to public pension plans in Rhode Island and California within two years of making the political contributions to Raimondo, as well as to a candidate for California state superintendent of schools and to a candidate for mayor of Los Angeles.

Wednesday, Raimondo’s office rebuked a local online news report about the SEC complaint that suggested she was involved in “pay-to-play scheme” with Oaktree. Her office called it “false reporting” about the SEC action.

“The campaign did not accept this donation,” Raimondo’s office said when asked by the Providence Business News to comment on the matter.

Referring to the Oaktree associate mentioned in the complaint, her office said, “this individual made a contribution that was flagged by the campaign and returned.”

Nevertheless, some of Raimondo’s political opponents used the matter Wednesday as an opportunity to criticize her.

Former R.I. Secretary of State Matt Brown, who is running for governor against Raimondo in the Democratic Party primary, said the SEC action was “hardly a surprise.”

“Does anyone believe this is the only time?” Brown said in a statement. “Raimondo’s relentless pay-to-play fundraisers with Wall Street and industries she’s supposed to regulate have hurt people and hurt Rhode Island.”

Also using the settlement of the complaint against Oaktree to criticize Raimondo was Republican candidate for governor Giovanni Feroce.

The State Investment Committee website report on the private equity performance for the Employee’s Retirement System of Rhode Island dated Dec. 31, 2017 – which shows that plan assets as of May 31, 2018 total $8.3 billion – indicates that the $20 million investment with Oaktree had an internal rate of return of 11.8 percent.

Scott Blake is a PBN staff writer. Email him at