Apollo Global Management Inc said on Wednesday it would launch an independent review of Chief Executive Leon Black’s ties with late financier and convicted sex offender Jeffrey Epstein, as some of the private equity firm’s investors issued statements for the first time expressing concerns. Black wrote to Apollo’s fund investors last week that he regretted making payments to Epstein for what he called “professional services,” but has denied any wrongdoing or inappropriate conduct related to his business and social relationship with him. Black, whose net worth is pegged by Forbes at $7.8 billion, was responding to a New York Times story that reported he had wired between $50 million and $75 million to Epstein over the last decade. The 69-year-old private equity veteran said the payments were for advice on estate planning, taxes and philanthropy. The news has sent shock waves through Wall Street, where Apollo reigns as one of the largest investors in corporate credit and leveraged buyouts, with $414 billion in assets under management as of the end of June. On Wednesday, the $57 billion Pennsylvania Public School Employees Retirement System (PSERS) said it would not consider any new investments in Apollo funds after speaking with the buyout firm about Black’s involvement with Epstein. “PSERS is closely following the ongoing legal issues and the newly launched internal Apollo investigation,” PSERS spokesman Steve Esack said in a statement. A spokeswoman for New York City Comptroller Scott Stringer, who manages the city’s five public pension funds totaling approximately $228.67 billion in assets, said in a statement they were “troubled” by these reports. “We are closely monitoring the situation in accordance with our fiduciary duty.” The Financial Times was the first to report PSERS’ comment. Bloomberg News reported that Cambridge Associates, which manages about $32 billion on behalf of institutional investors, said it may stop recommending Apollo funds to investors. Cambridge Associates declined to comment. Black, who co-founded Apollo in 1990, asked that the board’s conflicts committee, made up of independent board members, retain outside counsel to conduct a “thorough review” of the information he had shared about his relationship with Epstein, Apollo said in a regulatory filing on Wednesday. The board committee has appointed law firm Dechert LLP to conduct the review. Apollo’s stock closed 2.6% higher on Wednesday, after dropping 13% last week. “I think the damage to the stock has been done and investors are in a bit of a holding pattern in the near term to get some clarity to remove that overhang,” said Jefferies analyst Gerald O’Hara. Epstein, who was charged by federal prosecutors with sex trafficking last year, committed suicide in his New York City jail cell in August 2019, before his trial. Black and two other Apollo co-founders, Joshua Harris and Marc Rowan, control 52.9% of the private equity firm, according to regulatory filings. “From a common-sense perspective, it’s hard not to have concerns about whether directors of a controlled company are going to exercise true independence when investigating allegations against the controlling party,” said Eric Talley, a Columbia Law School professor and corporate governance expert. Talley said he needed to know more about the arrangement of Apollo’s hiring of independent counsel to assess its effectiveness.