Mass. Legislature Overrides Romney's Veto of Disclosure Prevention Laws

August 20, 2004 ( - The Massachusetts State Legislature, in a move that may signal future trends, has overriden Governor Mitt Romney's veto of legislation preventing the disclosure of pension fund investment details.

The legislation is aimed mainly at the $32 billion Massachusetts Pension Reserve Investment Management Board (PRIM), in hopes of shielding it from mandatory public disclosure laws. Under the legislation, PRIM would be exempt from the Massachusetts Freedom of Information Act in that it would not have to publicly release material which could disclose trade secrets or financial information, providing that the information could harm the competitive position of the person who released it. Also, the legislation allows PRIM to retain confidential information garnered in discussion regarding venture capital or private equity investments.

With this move, Massachusetts becomes the fourth state to shield public pension funds and/or university endowments from disclosure requests. Colorado, Virginia and Michigan all enacted similar legislation earlier in the year. The legislation by all four states has been seen largely as a response to moves by prominent private equity and venture capital firms to inhibit pubic institutions from investing because of fears of mandatory disclosure.

Disclosure has been a hot topic as of late, with larger numbers of public pension funds reallocating assets into higher-risk investments such as hedge funds, private equity and venture capital. There has been seen to be a tension between the perceived necessity of confidentiality in these high-risk investments and the apparent obligation to disclose how public money is invested. In Massachusetts, apparently, lawmakers have chosen confidentiality over disclosure.

– Kip McDaniel

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