Navnoor Kang, who oversaw the $50+ billion bond portfolio for the New York State Common Retirement Fund, was arrested last week and charged with accepting bribes — included cocaine and prostitutes — in exchange for steering billions of dollars of business to two different broker-dealers.
Had the Common fund called Kang’s previous employer when they hired him, they might have learned how Kang was fired for misconduct, according to the Wall Street Journal.
From the Wall Street Journal:
In hiring Mr. Kang, the fund skipped what in hindsight would prove a crucial step: It failed to call his most-recent employer to ask about his performance there, according to a person familiar with the matter.
That call may have disclosed that Guggenheim had fired Mr. Kang a year earlier for swapping trading commissions for concert tickets and other gifts, a violation of the firm’s internal reporting requirements, according to a federal complaint.
Guggenheim had fired Mr. Kang in January 2013 after the trader violated the firm’s policies, according to the SEC complaint. His troubles there had begun late in 2012, when he told colleagues he was attending a Rolling Stones concert with Gregg Schonhorn, who worked for a broker and was drawing trading commissions from Guggenheim, according to a person familiar with the matter.
State Comptroller Thomas DiNapoli has ordered a review of the hiring practices at the pension fund. Details from the Albany Times-Union:
In an interview on Talk 1300’s “Live from the State Capitol,” DiNapoli said that federal investigators had been given access to whatever they needed as they probed the alleged bribery scheme involving Navnoor Kang, but his office learned the depth of the issue when U.S. Attorney Preet Bharara announced charges against Kang on Wednesday.
“Should it have happened? Absolutely not,” DiNapoli said. “Do we need to look at our internal policies and procedures to see if there is something else we could do? Yes. Do we need to look again about vetting and hiring? We’re looking at that.”
DiNapoli has directed his office’s inspector general and the head of his office’s investigations unit to review the matter at hand and hiring procedures, which include a background check process.