Charlie Rose - 1 - 11/22/2010 ALL EXCERPTS MUST CREDIT “CHARLIE ROSE” (Intro) Charlie Rose: Steve Rattner's been the subject of much praise for his role in saving General Motors. He wrote about that in his book, "Overhaul." He is the subject of much criticism for his role in the New York State Pension Fund Scandal that has seen several people plead guilty and have their reputations tarnished. He played a significant role on Wall Street and in politics as a major fundraiser. He is a friend of President Obama, former President Clinton, Secretary of State Clinton, and many other prominent individuals from the world of politics and business in the United States. He worked for Mayor Bloomberg and the Bloomberg Foundation. This show has a business relationship with the Bloomberg Company. Steve is my friend. He was formerly Chairman of the Board of Channel 13, the public television station in New York that presents this program. He and his wife have supported our program. My role here is not to defend or prosecute. It is to ask questions that I and others want to know about his story. This has been a story that has been on the front page of “The New York Times” and other newspapers. It is about a man who was a subject of a recent profile in “Vanity Fair Magazine.” Last Thursday, Rattner agreed to pay the SEC $6.2 million to settle civil charges and accept a two-year ban from working with an investment advisor broker-dealer. The same day, New York Attorney general and incoming Governor Andrew Cuomo sued Steve Rattner as well seeking at least $26 million and his immediate lifetime ban from New York securities industry. In a statement, Attorney general Cuomo said Rattner was willing to do whatever it took to get his hands on pension fund money including paying kick-backs, focus trading a movie deal and funneling campaign contributions. “Through these law suits, we will recover his ill- gotten gains and hold Rattner accountable.” Steve Rattner replied in a statement, “While settling with the SEC begins a 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 facts. 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. That’s why I intend to clear my name by defending myself vigorously against this politically motivated law suit.” All this comes at a time which should have been about triumph and other circumstances that have led to greater heights for him in the Obama administration. It would be one of those great stories in American life, where a man despite all odds protests he’s innocent until he clears his name. Or it could be a great tragedy where someone who’s had a brilliant career tarnished and a great dream of public service stopped because of bad choices, perhaps illegal choices. It has all those elements, this story does. I am pleased to have Steve Rattner on this program at this time to offer his perspective on what happened and what might happen. With that I say welcome and thank you. Steve Rattner: Thank you for having me, Charlie. Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Charlie Rose - 2 - 11/22/2010 Charlie Rose: When you were last here, I want to include for this audience this conversation, you came here to talk about this book, “Overhaul,” which is about the automobile industry and, of course, at that time, this story was known to many peoples. Events have since happened. Here is what took place in an exchange with him at that time which is why he is here at this time. Here it is. [clip playing] Let’s start with what’s happened since that conversation at this table. Steve Rattner: Since that conversation at this table, as you said in your introduction, I was able to reach a settlement with the SEC which, while tough, was acceptable to me in the spirit of getting on with my life and trying to put this behind me. And as you also said in your introduction, for whatever set of reasons, Andrew Cuomo who is looking at exactly the same set of facts, exactly the same body of evidence as the SEC, chose not to settle and chose to sue me asking for, in my view, a ridiculous recompense and other damages. Charlie Rose: It’s said to be $26 million. It’s said to be a lifetime ban. Steve Rattner: So it is said. Charlie Rose: And there is also, it is said, there have been negotiations with him which weren’t acceptable to either you or the Attorney general’s office. Steve Rattner: We tried our hardest to reach an acceptable resolution. I would like to get on with my life. I have no interest in being in litigation with anybody let alone the Attorney general or the incoming governor of New York. But there are rights and wrongs in this situation and I’m not going to agree to settle for something that is just not fair and doesn’t reflect the facts and circumstances. Charlie Rose: Tell me what happened. What are the facts that got you and Quadrangle, your former firm, in this mess in the first place? Steve Rattner: What happened was that we along with a dozen or more other firms made a decision to hire as a placement agent to raise money for us a man called Hank Morris, someone who I actually knew pretty well through politics, who I knew or believed at the time to be honest, who came to us highly recommended by people whose judgment I trusted, who, Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Charlie Rose - 3 - 11/22/2010 unlike many people who raise money for funds like ours, was registered, had gone through the whole process with the SEC to become registered and affiliating with a licensed broker-dealer. His engagement was signed and vetted and drafted by our then counsel very, very carefully. And we believed we were going into business with an honest man who could raise money on our behalf, not just in New York, but in a series of places around the country. He presented himself as someone who was building a business, raising money for funds like ours, which is a -- was a legal business then, and it's a legal business today. Charlie Rose: Okay. So then what happens? So, I mean -- Steve Rattner: Then what happened was one day I awakened in February of this year to find that Mr. Morris and one of his colleagues -- [unintelligible] a colleague but a member of the New York state controller's office had been indicted on something like 123 counts. And it turned out, according to the indictment, that they had done a number of things that were potentially illegal, none of which we were aware of but involving potentially kickbacks and fee sharing and insolence peddling [spelled phonetically]. I'm not a lawyer, I can't even tell you the exact charges. But clearly they were in a lot of hot water. Since then, both Mr. Morris, Mr. Laglisi [spelled phonetically] and others have pled guilty to at least one charge in each case. Charlie Rose: So you have said you have done nothing wrong in this -- in any of this. Steve Rattner: I want to be clear that when I settle with the SEC, part of that settlement prohibits me from either admitting or denying or really even talking about the SEC piece of it. So I'd like to confine my comments to the attorney general's lawsuit against me and the charges he's made. Charlie Rose: And were they different in terms of what the accusations had been that led to the settlement in the SEC case versus the attorney general's case? Steve Rattner: Everyone can read that and reach their own judgment. I don't know that there's any substantive difference that I would identify for you. Charlie Rose: Okay. Steve Rattner: So let's talk about the attorney general. Prepared by National Capitol Contracting 200 N. Glebe Rd., #710 Arlington, VA 22203 Charlie Rose - 4 - 11/22/2010 Charlie Rose: All right. Steve Rattner: So the attorney general had a different view as to what the rights and wrongs of this were and decided to sue me. Charlie Rose: Okay. But I don't want to -- I'm not here to prosecute or defend. But the accusation is there was a -- that Mr. Morris and Mr. Laglisi received help in making -- distributing a movie. And part of that was in consideration of them giving you which resulted in $150 million for your fund that you gave them something in order for them to give you. And that's called a kickback or a bribe. And that's the problem. Steve Rattner: Well, there's a couple of potential issues. One is simply the hiring of Hank Morris, which I have just told you I believed and was told by my lawyers was legal then, legal now and done properly. The second you've just raised is the question of whether we, a Quadrangle or myself individually did anything to help this movie get made that influenced the outcome of the investment decision by New York state.