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Martinez Pay-To-Play Scandal?

Martinez Pay-To-Play Scandal?

The International Business Times is reporting that Gov. Susana Martinez's administration might have violated U.S. Securities and Exchange Commission rules by steering “at least $757 million to eight financial firms while donors linked to those firms have collectively given more than $1.2 million to Martinez and political groups supporting her.”

Is it Bill Richardson’s pay-to-play investment scandal all over again?

The International Business Times is reporting that Gov. Susana Martinez’s administration might have violated U.S. Securities and Exchange Commission rules by steering “at least $757 million to eight financial firms while donors linked to those firms have collectively given more than $1.2 million to Martinez and political groups supporting her.”

That, the IBT said, could be a violation of ethics rules that were instituted in 2010 “ to prevent Wall Street executives from using campaign contributions to influence government investments.”

The IBT said that when federal regulators forged the rules they used New Mexico, and Richardson’s pay-to-play investment scandal, as an example of why things needed to change.

But the IBT said that two state funds that manage more than $33 billion – the State Investment Council and the New Mexico Educational retirement Board – have shifted more money into higher-risk investments and shifted investments to eight entities that have given money to Martinez or PACs that support her.

Here are some excerpts from the IBT’s story:

During her tenure, New Mexico has been giving lucrative investment deals to financial firms whose executives have delivered big campaign donations to Martinez and to groups that have supported her election campaigns — a situation that may have violated the very pay-to-play rules that were passed in the wake of New Mexico’s previous scandals.

Under Martinez, two state funds managing more than $33 billion have shifted more money into higher-risk investments — resulting in below-average returns, but generating at least $729 million worth of fees in just the last four years. Amid that shift, New Mexico committed at least $757 million to eight financial firms while donors linked to those firms have collectively given more than $1.2 million to Martinez and political groups supporting her.

New Mexico is an example of the investment trends. The NMERB — whose board includes two gubernatorial appointees — manages a $12 billion pension fund for more than 100,000 current and retired educators. When Martinez won office in 2010, less than a quarter of the fund’s assets were in alternative investments. During Martinez’s tenure, that share rose to almost a third of the portfolio, and New Mexico officials said last year they want to have 40 percent in alternatives — more than double the average for major public pension systems.

A similar story unfolded at the State Investment Council (SIC), which Martinez chairs and which oversees a $21 billion endowment funded by taxes, leases, and royalties from oil and gas production. State records show that since Martinez became chair of the council, the SIC has increased its investments in various high-fee alternative investment classes, while decreasing its investments in traditional stocks.

The IBT said that Martinez’s office did not respond to requests for comment on its story.

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.

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