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New Law Mandates Additional Disclosure by California Public Pension Plans

Posted by Jennifer V. Gateb | Nov 23, 2016 | 0 Comments

The State of California recently enacted Assembly Bill No. 2833 (the “Act”), a new law that mandates additional public disclosure of information concerning fees and expenses paid by California Public Pension Plans (“PPPs”) with regard to their investments in private equity funds, venture funds, hedge funds or absolute return funds (collectively, “Private Funds”).

Effective January 1, 2017, the Act will require California public pensions or retirement systems to “undertake reasonable efforts” to obtain (from each Private Fund in which they invest) and disclose the following information to the public at least annually:

  • The fees and expenses that the PPP pays directly to the Private Fund, the Private Fund manager or related parties;
  • The PPP's pro rata share of fees and expenses not included in paragraph (1) that are paid from the Private Fund to its manager or related parties;
  • The PPP's pro rata share of carried interest distributed to the Private Fund manager or related parties;
  • The PPP's pro rata share of aggregate fees and expenses paid by all of the Private Fund portfolio companies to the Private Fund manager or related parties; and
  • California Public Records Act (“CPRA”) Information.

Intended to encourage the transparency behind the fees paid by PPPs to the managers of Private Funds, the impact the Act will have on investments by PPPs is unclear. California is the first state to enact such legislation, although similar initiatives have appeared in some states (with differing standards).  

Certainly, the Act will affect the information available to many individuals with interests in state, county and city-level California PPPs such as CalPERS, CalSTRS, SDCERS and the Regents of the University of California Retirement System. Contact Butterfield Schechter LLP for more details about the Act, including how to obtain the additional public disclosures, their expected effect on PPPs' investments with Private Funds and the potential effects on your interest in a California PPP.

About the Author

Jennifer V. Gateb

Jennifer V. Gateb practices in the areas of general tax and estate planning, ERISA (Employee Retirement Income Security Act of 1974) and related benefit matters.


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