MEMBER ALERT: OHIO AND CALIFORNIA FOIA ACTION

NVCA Members should be aware of important FOIA developments in both Ohio and California. For further information, please contact Jennifer Connell Dowling at jcdowling@nvca.org.

Ohio Bureau of Workers' Compensation Situation

Background
As many of you may be aware, in late December, the Ohio Bureau of Workers' Compensation (OBWC) indicated that on January 6, 2006, they planned to release data from a 2005 Private Equity Valuation Report which was developed for them by consulting firm Ennis Knupp (EK). The release of the data was in response to a Freedom of Information Act request made by The Columbus Dispatch. The report contains not only information about the venture capital funds in which the OBWC invests, but also confidential valuation information about the firms' underlying portfolio companies. At the time their intentions were made public, the NVCA issued a press release and sent a letter to the OBWC strongly discouraging the release of the EK report. Click here for the NVCA press statement. Several of our members who were impacted have objected directly the OBWC as well.

Current Situation
On January 6, the OBWC did release parts of the EK report to the public. Click here to view their press release. Based on the strong objections they received from the NVCA and private equity firms, the OBWC did refrain from releasing the sections of the report that contained portfolio company information - for the time being. They are now considering filing a declaratory judgment action in Ohio state court for a determination by a judge as to whether the portfolio company information contained in the report falls within the trade secret exemption and should be permanently withheld or disclosed. We are monitoring this situation closely and plan to support our member firms and the venture industry in this process through whatever means are appropriate. We continue to unequivocally assert that the disclosure of portfolio company information is inappropriate and irresponsible. We are working closely with Carl Metzger of Goodwin Procter on the matter and will keep our membership informed of the developments in the case.

California Takes Important Step In Clarifying FOIA Rules

California's new amendment to its Public Records Act (PRA) went into effect on January 1, 2006.

The new law designates that the following information cannot be disclosed by public pension funds about their "alternative investments" under the PRA.

(1) Due diligence materials that are proprietary to the public investment fund or the alternative investment vehicle.

(2) Quarterly and annual financial statements of alternative investment vehicles.

(3) Meeting materials of alternative investment vehicles.

(4) Information regarding the portfolio positions in which alternative investment funds invest.

(5) Capital call and distribution notices.

(6) Alternative investment agreements and all related documents.

NVCA supported the bill, which was sponsored by Silicon Valley state senator Joe Simitian and signed into law by Governor Arnold Schwarzenegger. By codifying and clarifying the PRA criteria, the new law should provide greater predictability for venture capital firms who have California public pension clients.