Click here for printer friendly page

Update on State Bills limiting disclosure of fund details

In a previous Private Equity Alert, Nixon Peabody discussed a trend in which four states, Massachusetts, Colorado, Michigan and Virginia, carved out a legislative exemption shielding public pension and university endowment funds from disclosure requests pursuant to freedom of information laws. Despite some resistance, these legislative efforts took effect during 2004 and 2005. Without the protections such exemptions provide, upon a request for information pursuant to FOIA, pension funds and public institutions are required to disclose information about the content and performance of their holdings in private equity funds.

Information disclosed pursuant to such requests run the risk of providing public access to commercially sensitive information about a fund's underlying asset data. Such disclosed information might include, among other things, sensitive competitive information about portfolio companies and their trade secrets.

The trend by some states to limit FOIA disclosure with respect to private equity investments is largely due to policies of certain high profile private equity funds to either bar public institutions and public pension funds from investing or materially limit underlying asset and performance information provided to them in order to avoid any disclosure required pursuant to a FOIA request.

Some fund managers remain skeptical about the real value these legislative protections are anticipated to provide against disclosure pursuant to FOIA requests, expressing concern that if an exception to FOIA can be passed into law it can also be struck down in a new legislative session.

Click here to view full report (pdf 239kb)

You need Adobe Acrobat to read this document. If you do not have it, you can download it free from www.adobe.com/products/acrobat/readstep.html

Nixon Peabody LLP is one of the largest multipractice law firms in the United States, with offices in fourteen cities and more than six hundred attorneys collaborating across fifteen major practice areas. The firm's size, diversity, and state-of-the-art information systems enable it to offer a comprehensive, integrated range of legal services to individuals and organizations of all sizes in local, state, national, and international matters.