BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 574 (Pan) - University of California: alternative investment
information.
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|Version: April 22, 2015 |Policy Vote: ED. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 18, 2015 |Consultant: Jillian Kissee |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: This bill requires the University of California (UC)
to obtain specified information from each private equity fund,
venture fund, hedge fund, or absolute return fund in which the
UC provides or has provided funds for investment.
Fiscal
Impact:
UC indicates that this bill would require it to obtain the
required information from the investment firms through
litigation. UC anticipates such costs to be at least
$500,000.
Background: Existing law defines "alternative investment" as an investment
in a private equity fund, venture fund, hedge fund, or absolute
return fund.
SB 574 (Pan) Page 1 of
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Existing law exempts specified records regarding alternative
investments in which public investment funds are invested from
disclosure, unless the information has already been publicly
released by the keeper of the information. Information exempted
from disclosure includes due diligence materials that are
proprietary, quarterly and annual financial statements, meeting
materials, records containing information regarding the
portfolio positions in which alternative investment funds
invest, capital call and distribution notices, and alternative
investment agreements and all related documents.
Existing law, the California Public Records Act (CPRA) governs
the disclosure of information collected and maintained by public
agencies. Generally, all public records are accessible to the
public upon request, unless the record requested is exempt from
public disclosure. There are 30 general categories of documents
or information that are exempt from disclosure, essentially due
to the character of the information. Unless it is shown that
the public's interest in disclosure outweighs the public's
interest in non-disclosure of the information, the exempt
information may be withheld by the public agency that has
custody of the information.
Existing law defines state agency, for purposes of the CPRA, to
include every state officer, department, division, bureau,
board, and commission or other state body or agency, except for
the Legislature and the Judiciary. The California State
University, the UC, and the California Community Colleges are
considered to be state agencies for this purpose. (Government
Code § 6250, et. al.)
This bill is intended to respond to a ruling by the California
Court of Appeals in Regents of the University of California v.
Superior Court (2013) 222 Cal. App. 4th 383, appealing the
decision of the Superior Court for Alameda County in regard to a
request made by Reuters America LLC for specific information
from the UC Regents pertaining to their investments in specified
funds. The Superior Court found the Regents were required to
use "objectively reasonable efforts" to obtain individual fund
information for the Regent's current investments from two
private equity firms even though the Regents had not prepared,
owned, used, or retained this fund information. This ruling was
overturned by the appeals court which found that, because the
information was not prepared, owned, used or retained by the
SB 574 (Pan) Page 2 of
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Regents, were not "public records" within the meaning of CPRA.
Proposed Law:
This bill requires the UC to obtain specified information
subject to disclosure, and deemed not to be considered a trade
secret, in current law from each private equity fund, venture
fund, hedge fund, or absolute return fund in which the UC
provides or has provided funds for investment.
Specifically, this bill requires the UC to obtain the following
information:
1. The name, address, and vintage year of each alternative
investment vehicle.
2. The dollar amount of the commitment made to each
alternative investment vehicle by the public investment
fund since inception.
3. The dollar amount of cash contributions made by the
public investment fund to each alternative investment
vehicle since inception.
4. The dollar amount, on a fiscal year-end basis, of cash
distributions received by the public investment fund each
alternative investment vehicle.
5. The dollar amount, on a fiscal year-end basis, of cash
distributions received by the public investment fund plus
remaining value of partnership assets attributable to the
public investment fund's investment in each alternative
investment vehicle.
6. The net internal rate of return of each alternative
investment vehicle since inception.
7. The investment multiple of each alternative investment
vehicle since inception.
8. The dollar amount of the total management fees and costs
paid on an annual fiscal year-end basis, by the public
investment fund to each alternative investment vehicle.
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9. The dollar amount of cash profit received by public
investment funds from each alternative investment vehicle
on a fiscal year-end basis.
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