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Representatives of institutional investors that had invested in Markstone are demanding that the private equity fund void former partner Elliott Broidy's right to "success bonuses."

Funds like Markstone make money in two ways. One is management fees, which are simply a percent of capital pledges. In Markstone's case, it charged 2% of the pledges each year. (Which means if it had pledges of $800 million, it charged 2% of $800 million, not 2% of money actually under management.) The second is "success fees," which in its case were 20% of profit.

Broidy was to receive a significant portion of Markstone's success fees if and when any are paid. But investors in the fund oppose any such payout, after Broidy confessed two months ago to bribing New York officials to invest city workers' pension money in Markstone. Ultimately Broidy obtained $250 million in such funds.

His admission led to his resignation as Markstone chairman. His functions have been assumed by Danny Gillerman, an industrialist and a former Israeli ambassador to the United Nations.

Broidy also agreed, under his deal with New York state prosecutors, to return $18 million to Markstone that had been paid to him as his share of management fees.

Broidy's sentence for bribery will be handed down in the first half of this year.

U.S. officials are also looking into how Broidy convinced another state pension fund, the giant CalPERS of California, to invest in Markstone as well. In its case, though, it only put in $50 million.

Broidy's agreement with the prosecution in New York does not touch on his right to bonuses.

As far as is known, Markstone managers Ron Lubash and Amir Kess are working with lawyers to fully sever Broidy's relations with the fund, which would deny him access to profit-sharing mechanisms. In any case, such profits would only be shared out after the fund ends its lifetime.

All management fees and other payouts to Broidy by Markstone have been stopped.