Schwarzenegger Passes Private Equity Disclosure Bill

September 23, 2005 ( - California Governor Arnold Schwarzenegger passed into law a bill governing what public pension funds must reveal about their private equity investments.

State Senator Joe Simitian (D) proposed the bill addressing concerns that investment disclosure could possibly reveal confidential information of venture capital firms that could be used against them by their competitors (See  Golden State Guidelines Proposed for Venture Capital Disclosures ).   “It achieves our goal of providing as much transparency as possible to the public about our investments while still protecting our investments in the private equity industry,” said Brad Pacheco, spokesman for the California Public Employees’ Retirement System (CalPERS), according to the Sacramento Bee.

According to the Bee, the new law allows public pensions and endowments to keep confidential a number of documents, including annual financial statements, meeting notes, portfolio positions and investment agreements.  It covers investments in such areas as venture capital startups and high-risk hedge funds.

The Bee notes that CalPERS was shut out from participating in a $600 million fund by Menlo Park-based US Venture Partners last year, which declined to accept CalPERS funding because of concerns over public records disclosure.   CalPERS recently decided to retract fund performance data placed on its Web site as part of a lawsuit settlement (See  CalPERS To Remove Posted Fund Performance Data ).