University of California Must Disclose Fund Investments Details

The University of California, which manages a $70 billion investment portfolio for retirees, faces a tentative court order to make “a good faith effort” to get and disclose the returns it earns from Sequoia Capital and Kleiner Perkins Caufield & Byers funds.

State court Judge Evelio Grillo in Oakland, California, said in a tentative ruling that information about the university’s commitment to the funds, cash in them, current net asset values and returns for individual investment vehicles with Kleiner and Sequoia, and communications with the private equity firms, isn’t exempt from disclosure under state laws passed in 2005 that shield some investment data from the public.

Grillo rejected the university regents’ argument in a public records lawsuit that the information should remain secret because that’s what Kleiner and Sequoia want and the school values its relationship with the venture firms. The 26-member board of regents governs the university.

“The regents has not demonstrated that the public interest in permitting the regents the opportunity to make investments with Sequoia and Kleiner Perkins ‘clearly outweighs’ the public interest in public review of communications between public pension funds and investment vehicles,” Grillo said in the provisional ruling disclosed Oct. 23.

Kleiner, which provided startup financing to and Google Inc., and Sequoia, which backed Apple Inc. and Yahoo! Inc., haven’t provided individual fund performance information to the university since 2004, Grillo said.

The ruling came in a public records lawsuit against the university filed by Reuters America LLC, a unit of Thomson Reuters Corp. The news agency is a competitor of Bloomberg News.

Order on Hold

Grillo ordered the university and Reuters to meet about disclosing the information. He put his ruling on hold until Jan. 16 to allow the parties to appeal his decision. Menlo Park, California-based Kleiner and Sequoia aren’t named as defendants in the lawsuit.

“We don’t believe it’s appropriate to comment until he issues his final ruling after considering the arguments presented by the parties” at an Oct. 19 hearing, said Dianne Klein, a spokeswoman for the University of California’s office of the president, in an e-mail today.

Andrew Kovacs, a spokesman for Menlo Park-based Sequoia Capital Operations LLC, declined to comment on the ruling. An e-mail to Kleiner’s media office wasn’t immediately.

The case is Reuters v. Regents, RG12-613664, Alameda County Superior Court (Oakland, California).

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