Battleground states

All FOIA roads lead to Sacramento as the California Public Employees' Retirement System (CalPERS) finds itself yet again the subject of a groundbreaking public-disclosure suite: This time, the data requested concerns management fees. In September, public advocacy group California First Amendment Coalition filed suit requesting that CalPERS release all reports showing fees paid to private equity and hedge funds on an individual basis (the pension already made fee information available on an aggregate basis). CalPERS maintained that such disclosure could leave it shut out of future partnerships, a defense similar to the one it used in 2002, when it sought to protect information related to fund IRRs. CalPERS ended up settling that case out of court and began publishing performance data online. The pension now will also release the dollar amounts of fees, as well as gains, associated with each private equity and hedge fund (see story p.46).

In April, the Rocky Mountain state's legislature passed a law that protects the treasurer and public pension funds from revealing any information regarding portfolio company-level valuations. The public, however, will still have access to the amount of capital a public entity commits to an individual fund, the distributions it receives, and the internal rates of return of the funds in which it has invested.

Deep in the heart of the Lone Star State, private equity limited partners are shaking in their boots in anticipation of a court ruling regarding portfolio-data disclosure. The state attorney general, Greg Abbott, recently ruled that a local private equity firm, Texas Growth Fund, had to give a newspaper details of its investments. The firm, along with the Texas Teacher Retirement System – a major private equity backer – promptly filed suit. This is the first and to date only case where a public entity has ruled that portfolio company data be made public. If the next ruling goes Abbott's way, many GPs won't want to mess with Texas.

After failing to get the governor's signature on a measure similar to Florida's last year, state legislators in November again introduced a bill similar to a law in Colorado that would open private equity fund performance figures to the public while restricting details about the fund's underlying assets. The bill had a strong start earlier in the year but was tabled when Illinois' legislature went on summer break; it is now part of a special legislative veto session, and legislators are betting on its approval.

In April, the governor approved an amendment to the state's open-records act, allowing the state's public universities and colleges to withhold from public scrutiny individual partnership return data, including fund valuations, distributions and IRRs, as well as all portfolio company data. The only information public schools are required to release by request are names of partnerships, amount of money invested in those partnerships and aggregated return data on an annual basis. The new legislation matches up with Michigan's Public Employee Retirement Security Investment Act, which protects fund data from disclosure by the state's pension funds and retirement systems. The Michigan Department of Treasury last year used this act to turn down a request for fund IRRs and distributions from data company Private Equity Interactive.

In October, state treasurer Timothy Cahill released IRRs for more than 100 private equity investments that the Massachusetts Pension Reserves Investment Management (MassPRIM) made between 1986 and 1998. Cahill had resisted disclosing the figures, and even created legislation over the summer that would have kept such details secret. However, in what many GPs saw as a slap in the face, Massachusetts governor Mitt Romney – the co-founder of private equity firm Bain Capital, no less – vetoed legislation that would have restricted disclosure of the details of private equity and venture capital investments made by the state's pension fund. Private equity firms had been confident of the governor's approval. In news reports, Romney maintained his office did not have sufficient time to review the proposal and worried about potential abuse and self-dealing in the state.

In July, the state passed a law allowing any confidential information provided to the public retirement system by private equity limited partnerships to be exempt from FOIA requests. However, the pension must still provide the identity of any private equity partnership in which it invests and the amount and present value of any such investments.

Last year, the state senate considered an amendment to its open-records law that would have prevented the Florida State Board of Administration from releasing certain data regarding its alternative investment programme. However, the sky dimmed on the Sunshine State as the bill never reached Governor Jeb Bush's desk.