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Markstone Capital reaches resolution with Attorney General

Markstone Capital, a private equity firm based in Tel Aviv, has reached an agreement with the New York State Attorney General ending the pension fund inquiry related to the conduct of former chairman, Elliott Broidy.

In December 2009 Broidy resigned from the firm and pleaded guilty to one count of rewarding official misconduct.

"Markstone’s agreement with the Attorney General enables us to move forward with our core business, which is investing in Israeli companies," says Dan Gillerman, chairman of Markstone Capital.

Markstone Capital has agreed to make a USD18m payment to the New York State Common Retirement Fund over the next three and a half years as a result of its previous affiliation with Broidy. This represents management fees attributable to the New York investment in Markstone. This payment will not come from assets held on behalf of investors, and will have no impact on any investor who has placed funds with Markstone.

The agreement is similar to the civil agreements made by other private equity firms such as Carlyle and Riverstone.

In addition, Markstone will adopt the Attorney General’s code of conduct which applies a new standard for ethics in the private equity industry. This code of conduct bans investment firms from hiring, using or compensating placement agents, lobbyists, or other third-party intermediaries to communicate or interact with public pension funds to obtain investments.

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