|
 |
| 2002 News and Press Releases |
|
|
HEADLINE ARCHIVED:
Hurricane FOIA Slams Public Pension Funds
By: Michael V. Copeland
Venture Capital Journal. December 1, 2002
_________________________________________________________________________
EXCERPT: It has spread all the way from Massachusetts to Alaska and has hit Illinois, Texas and California in between. It's not a natural disaster, but some venture capitalists say it has all the makings of a financial calamity. The "it" in question is the request under the Freedom of Information Act (FOIA) for public agencies to release private equity performance figures. The requests vary from return information to entire partnership agreements and details on the portfolio companies in which the funds have invested. Thus far, Texas has been the only state to comply with such a request. The University of Texas Investment Management Co. (UTIMCO) in September released fund-by-fund performance of its venture capital investments (see November VCJ). Whether others follow suit, and whether states can be forced to release return information and more will be decided in court. The only case in the court involves the California Public Employees' Retirement System, which is being sued by the San Jose Mercury News newspaper to release return data (see "All Eyes on CalPERS Suit, page 6). A judge was scheduled to hear the case on Nov. 14, but a decision was unavailable before VCJ went to press. The outcome of any legal case is far from certain, but what is certain is that more of these requests will be made, and not just of state pension funds. Yale University, for example, is being pressed to disclose its private equity holdings and performance. The essence of any legal battle will be whether a particular state's FOIA law trumps the non-disclosure agreements signed by the public pension funds when they invested in VC funds. Most state FOIA laws mirror the federal FOIA in the way they are constructed, says Richard Moorhouse, government contracts partner in the Washington, D.C., office of Reed Smith. At its most basic level, FOIA was constructed to provide a legal avenue for the release of public documents. But that doesn't mean everything within those public documents will necessarily be made public. FOIA has a series of exemptions, the most critical of which for VCs is an exemption that allows them to not disclose any information they deem to be proprietary. They would need to show that the release of the information would harm the firm because it benefits competitors or that it would reveal a trade secret. Court cases will make clear what is proprietary and what is public, and the answers will vary from state to state. Texas is known as a state that hews closely to FOIA law. As a result, it offered up the private equity return data held by UTIMCO to the general public.
|
|
|
