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There's no excuse for the University of California to continue keeping data on its venture capital investments under wraps.
In a strong, sound and thorough decision, a Superior Court judge last week ordered the university to open the books on its investments in private funds. The ruling came in response to a lawsuit filed by the Mercury News, the Coalition of University Employees and a UC professor seeking better disclosure of the university's investment records.
California law requires public institutions, such as UC, to conduct their business in the public eye. For more than 173,000 current and former workers, few issues can be of more interest than how the university is managing $34 billion in investments on their behalf. And the university regents have an obligation to all California taxpayers to be open to public scrutiny.
UC's concern
The university argued that if it were forced to disclose some investment data, it would likely be shut out of some of the best-performing venture funds, which often insist on secrecy.
But Alameda County Superior Court Judge James Richman rightly said that the record doesn't support the university's claims.
Public universities in Michigan, Texas and Illinois, as well as public pension funds in Washington state and California, have disclosed the performance of their private investments without apparent consequences, Richman noted. He described the university's claims as "nothing more than speculative, self-serving opinions designed to preclude the dissemination of information to which the public is entitled."
Investment firms
Just as the ruling was issued, Sequoia Capital, a top-tier venture firm, announced it was seeking to exclude the University of Michigan from its latest fund for disclosing investment results. Sequoia did not say what it would do about UC, which is also an investor in its funds.
It's fine for Sequoia to choose not to do business with some public institutions. But firms that do invest the public's money must be open to public scrutiny.
Other top firms, including Accel Partners, have said the ruling would not affect their relationship with UC. That means there will be plenty of good places for the university to continue investing the pension funds for its employees and retirees.