The investigation has been conducted for two years by New York Attorney General Andrew Cuomo and the federal government’s Securities and Exchange Commission. The charges center on millions of dollars in fees paid by a private equity group headed by Rattner to a “middleman” group which provided access to the $122 billion New York state pension fund for Rattner’s group. While the payments themselves are not illegal, guaranteeing access to the pension fund in exchange for payments would be illegal.

Two New York state officials, Alan Havesi and David Loglisci, have been indicted on 123 criminal counts related to the investigation. Insiders claim that Rattner met with Loglisci about the investments with the pension fund.

A Treasury Department spokeswoman announced that Rattner informed the department of the pending investigation during the run-up to his appointment as head of the autos task force. The Treasury is in charge of the task force, charged with bringing GM and Chrysler back to profitability.

Rattner’s Background

Rattner spent years as an investment banker with Lehman Brothers, Morgan Stanley and Lazard Freres & Co. (where he occupied the #2 position at one point), before starting investment fund Quadrangle Group in 2000. Early in 2009, President Barack Obama appointed Rattner as head of the 24-member-strong auto task force to bring the auto industry back to profitability.