NEW YORK (Reuters) – A former managing director at broker-dealer Sterne Agee was sentenced on Friday to six months’ home confinement after she pleaded guilty to bribing a former portfolio manager at New York state’s retirement fund in exchange for tens of millions of dollars’ worth of business.
Deborah Kelley, 59, was sentenced by U.S. District Judge Paul Oetken in Manhattan, who also ordered her to pay a $50,000 fine and perform 1,000 hours of community service.
The charge against Kelley emerged from the latest pay-to-play case involving the third-largest U.S. pension fund, following a scandal a decade ago that sent the state comptroller to prison.
The $184.5 billion New York State Common Retirement Fund is the investment arm of the New York State and Local Employees’ Retirement System and the New York State and Local Police and Fire Retirement System.
Kelley said at Friday’s hearing before being sentenced that she was “remorseful” for her actions.
“As hard as I try, I cannot understand why I did this,” she said. “It was the worst decision of my life.”
Oetken said his decision not to give Kelley any prison time was affected by a large number letters supporting her from friends and family.
“There is no question in my mind that Ms. Kelley is a good person who has been a hugely positive force in her family and her community,” he said.
Kelley pleaded guilty in May, admitting that between 2014 and 2016, she paid bribes to Navnoor Kang, former director of fixed income and head of portfolio strategy at the Common Retirement Fund.
Oetken said at Friday’s hearing that the bribes took the form of paying for two vacations for Kang and his girlfriend, and amounted to about $19,000.
Prosecutors have said that Kang reciprocated by steering state pension business to Kelley’s firm – doing about $156 million in trades with the firm in the fiscal year ending March 1, 2015, and about $179 million in the fiscal year ending March 1, 2016.
Kelley received 35 to 40 percent of the hundreds of thousands of dollars in commissions the firm earned on those trades, according to prosecutors.
Kang was also charged with corruption. He pleaded not guilty in January.