Auto Task Force Chief Focus of Probe: Report

Steven Rattner, chosen by the Obama administration to lead the auto task force, was one of the executives involved with payments under scrutiny in a probe of an alleged kickback scheme at New York state's pension fund, the Wall Street Journal reports, citing a person familiar with the matter.

A Securities and Exchange Commission complaint says a "senior executive" of Rattner's investment firm Quadrangle met in 2004 with a politically connected consultant about a finder's fee. Later, the complaint says, the firm received an investment from the state pension fund and paid $1.1 million in fees, the Journal reports.

The "senior executive," not named in the complaint, is Rattner, according to the person familiar with the matter, reports the Journal. Rattner is co-founder of Quadrangle, which he left to join the Treasury Department to head the auto task force earlier in 2009. Neither Rattner nor Quadrangle has been accused of any wrongdoing, the Journal reports.

Rattner didn't return calls for comment from the newspaper.

A spokeswoman from the Treasury Department said Rattner "made us aware of the pending investigation."

In the long-running pay-to-play case, the Journal reports, authorities allege that about 20 investment firms made payments in exchange for investments from the $122 billion New York State Common Retirement Fund. The case, being investigated by New York Attorney General Andrew Cuomo and the SEC, has led to three criminal indictments and a guilty plea. The attorney general's office and the SEC declined to comment, the Journal reports.

The next phase of the investigation is likely to focus more on the investment firms, which include Quadrangle, Carlyle Group and Odyssey Investment Partners. The three firms say they have cooperated and aren't targets of the investigation. The Journal reports authorities are trying to determine whether any of the firms violated securities laws in paying fees to a placement agent for access to the state pension fund.

Rattner was tapped earlier this year by President Barack Obama to head a task force formed to figure out how to restructure U.S. auto makers General Motors (GM) and Chrysler.

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