California’s Gov. Brown signs PE transparency bill

  • Law applies to commitments entered after January 1, 2017
  • Requires publication of info regarding carried interest, fees, expenses
  • Greater transparency benefits all stakeholders, says Cooley

California Gov. Jerry Brown signed a private-equity-transparency bill into law on Wednesday, cementing a long effort to codify the level of disclosure general partners must provide to the state’s public pensions.

The bill, sponsored by Democratic Assemblyman Ken Cooley and State Treasurer John Chiang, requires PE firms to provide California’s public pensions with more information about management fees, carried interest and expenses charged to their fund investors and underlying portfolio companies.

The law applies to any commitment entered after January 1, 2017. Existing fund commitments are not subject to disclosure unless a California pension commits additional capital to the vehicles.

Under the law, California’s public pensions must publicly report their pro-rata shares of carried interest, fees and other expenses at least annually, effectively standardizing disclosure.

Public pensions vary in the level of detail they disclose about their PE holdings. Many do not, or are unable to, provide information about certain fees and expenses their fund managers charge.

“Greater transparency in the fees paid to Wall Street will benefit all stakeholders in pension administration – taxpayers, administrators of all public and private pension plans, and all California cities, counties, and state governments and employees,” Cooley in a statement.

State pensions, including California Public Employees’ Retirement System and California State Teachers’ Retirement System, opposed elements of the bill, AB 2833. Transparency advocates, including former CalPERS investment Chairman Michael Flaherman, argued the final version of AB 2833 did not go far enough to uncover costs firms allocate across different investment vehicles.

The bill received unanimous approval from California’s Senate and Assembly this summer.

A similar legislative effort is underway in Illinois. That bill has yet to be considered by the state’s House of Representatives.

Action Item: To read AB 2833 in its entirety, visit