140516112453-charlie-baker-620xa
Charlie Baker Photo: Boston Globe/Getty Images

New Jersey pension system investigates pay-to-play allegations

May 22, 2014

FORTUNE -- Last week we discussed how venture capital firm General Catalyst Partners may have violated New Jersey pay-to-play laws, by not disclosing a large political donation made by Charlie Baker, an executive-in-residence at the firm who currently is running (again) for Massachusetts governor. At issue is that General Catalyst did not disclose the donation when soliciting what ultimately became a $15 million investment from New Jersey's public pension system.

Sources familiar with the situation now tell Fortune that the New Jersey Investment Council is asking state attorneys to review the situation, in order to render a legal opinion on whether or not Baker qualifies as an investment manager under state law.

It remains unclear exactly which attorneys will be asked to render the opinion. One option could be to use counsel within a separate NJ Treasury department, or possibly one within the state Attorney General's office.

Also unknown is what will happen if General Catalyst is found to be in violation of pay-to-play rules. The most likely outcome would be that New Jersey would simply cancel the remainder of its $15 million fund commitment (less than half has been called so far), although it also could choose to sell the entire interest (funded and unfunded) via the secondary market.

A New Jersey Treasury spokesman declined comment.

Sign up for my daily email newsletter on deals and deal-makers: GetTermSheet.com

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions