California Regents Needn’t Disclose Private-Equity Return

The University of California won a court ruling that it doesn’t have to obtain and make public records about the performance of its investments with private equity firms Sequoia Capital and Kleiner Perkins Caufield & Byers.

A California appeals court in San Francisco ruled that while the records pertain to the conduct of the UC system, a public entity that manages $82.3 billion in investments, the university doesn’t prepare or own documents detailing what it’s making on money invested with Sequoia and Kleiner. As such, the documents aren’t covered by the California Public Records Acts, the court said.

The justices reversed a trial judge’s ruling and denied a petition by Reuters America LLC to force the university to get the records of its investment returns and release them.

“No language in the California Public Records Act creates an obligation to create or obtain a particular record when the document is not prepared, owned, used or retained by a public agency,” the court said in a ruling today.

Superior Court Judge Evelio Grillo in Oakland, California, had ruled 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.

‘Total Victory’

“This is a complete and total victory for us,” Dianne Klein, a spokeswoman for the UC Regents, said in a phone interview. The appeals court recognized that Reuters “overstepped the boundaries of the act” when it sought to compel the university to obtain records about investments made with Sequoia and Kleiner, she said

UC doesn’t release its returns on investments in individual funds and relies on fund managers to provide periodic updates, Klein said.

Following a 2003 court decision ordering the university to disclose individual fund-level performance data already in its possession, Sequoia and Kleiner Perkins decided to allow UC to invest in their funds on the condition that it not receive individual fund-level performance information, Klein said. The university concluded that continued investment in these funds was to its benefit and that it could adequately monitor the investment based on other available information.

The ruling came in a public records lawsuit against the university filed by the unit of Thomson Reuters Corp. The data and news service is a competitor of Bloomberg News and its parent, Bloomberg LP.

“We are obviously disappointed by the court’s ruling and continue to believe the records are not only in the public interest, but should be disclosed under the California Public Records Act,” Heather Carpenter, a Reuters spokeswoman, said in an e-mail.

The case is Regents of the University of California v. The Superior Court of Alameda County, A138136, Court of Appeal of the State of California, First Appellate District (San Francisco).

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