Reuters suit seeks data on Kleiner, Sequoia funds

Thu Apr 26, 2012 5:07pm EDT
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By Sarah McBride

SAN FRANCISCO (Reuters) - The University of California could be forced to disclose closely guarded information on the investment performance of venture capital funds managed by Kleiner Perkins Caufield & Byers and Sequoia Capital after a judge last week allowed a lawsuit over the issue to move forward.

The lawsuit, filed in California state court in Oakland by Reuters America, a unit of Thomson Reuters, argues that the state Public Records Act requires disclosure of specific investment-return information for the university system's $10.65 billion endowment fund.

The university says the investment-performance information for the individual funds is not in the public record because it does not have the data. It says it only receives aggregate data on its holdings in multiple funds run by the two firms -- a structure the lawsuit alleges is designed to avoid disclosure.

The lawsuit illustrates the conflict between the desire of public investment funds to invest with top-tier venture firms and the desire of those firms to keep their performance a secret. Many public institutions now use so-called "blocker" funds that are designed to satisfy disclosure requirements while keeping detailed investment performance data under wraps.

The University of California "takes compliance with the Public Records Act very seriously, and has complied in this case," said Dianne Klein, a university spokeswoman. "We believe the lawsuit is without merit, and will vigorously defend that position in court."

Thomson Reuters counsel Karl Olson said, "If Kleiner Perkins and Sequoia are really the cream of the crop, they should be happy to disclose fund-level performance."

A spokeswoman for Kleiner Perkins declined to comment. A spokesman for Sequoia declined to comment.

California's public-records law, which was amended after a 2003 lawsuit forced the University of California to disclose investment returns, shields some types of investment data from disclosure.   Continued...