A bill introduced earlier this year in the California State Senate passed another hurdle last month in its move toward becoming a law. The California State Senate’s Judiciary Committee voted unanimously (7-0) to approve S.B. 439, which would limit how much private equity firms have to disclose. The bill was introduced by California State Senator Joe Simitian. Simitian’s 11th State Senate district is located in Silicon Valley and includes a sizeable segment of the venture capital industry.
The bill is in the State Senate’s Appropriations Committee where it must pass before being voted on by the entire Senate. While that committee may take several weeks, the entire Senate may be able to vote on the bill before the end of the month. The legislation then must move through the State Assembly for full passage. Simitian has expressed confidence that the bill will become law by the beginning of next year.
The disclosure issue in California was resolved somewhat by past cases. Lawsuits and legal agreements involving The San Jose Mercury News and the California First Amendment Coalition set a standard whereby some information such as management fees, returns, and amounts invested in funds are disclosed but portfolio company valuations and other information is kept confidential. S.B. 439’s aim is to put this precedent into law.
While there have been no further challenges to California’s public disclosure laws regarding pension information, proponents of the legislation say that the door is still open for future legal battles without a written law for guidance. The California Public Employees’ Retirement System (CalPERS) has voiced support for the legislation, citing the need to clarify public law and the potential danger of future lawsuits.