CALIFORNIA — The California Supreme Courtdiscarded the University of California’s final bid last week to withholddetailed information on investments it makes in venture capital funds for thesystem’s pension plan holders.The supreme court’s refusal to hear thecase on Sept. 30 upholds a state superior court’s Aug. 28 ruling that the170,000 employees and retirees who invest in UC’s retirement plan, as well asthe public, have a right to know the financial performance of investments madewith public money.A victory for the media and UC employees, the decisionconfirms a trend in California and the nation to force public pension funds todisclose their investment records. “UC cannot treat these investmentslike its own private checkbook,” said Karl Olson, lawyer for the San JoseMercury News and the Coalition of University Employees, the twoorganizations that sued to obtain the records. “This is an institution thatseems to think it’s above the law and doesn’t have to comply with thepublic-records act. Three courts have ruled now that they’re wrong.”The San Jose Mercury News and CUE sued last April, along with aformer University of California at Berkeley physics professor, to obtain theinternal rate of return records of UC’s venture capital investments—- information they say UC retracted when the stock market took asharp decline in 2000.”They were releasing the information when it wasgood, but when the bubble burst, they started calling the information tradesecrets,” Olson said. “They’re taking the King George attitude —-they’re the kings and the public has no say in where their moneygoes.”The UC retirement plan manages $34 billion for its investors. UC’s overall endowment fund fell 10.7 percent last year, more than any other ofthe 10 largest U.S. university endowments, except for the MassachusettsInstitute of Technology, which dropped 12.6 percent.UC officials saypublic disclosure will do more harm than good for pension members and that UC’sinternal rate of return records qualify as “trade secrets” —-records exempt from disclosure under the California Public RecordsAct.”We are attempting to protect our access to the top-tier funds bynot breaching our individual confidentiality agreements with them,” said UCtreasurer David H. Russ in a statement.The lower court’s Aug. 28 rulingthat UC must disclose its investment records has already yielded adverse effectsfor the pension fund. Citing the ruling, one of the university’s oldest andlargest Silicon Valley venture capital firms, Sequoia Capital, terminated UCfrom its newest partnership and asked UC to sell its holdings in 10 otherSequoia funds. Sequoia Capital wrote a letter to UC following the ruling,stating the firm does not want to be “badgered, hounded and stalked” forconfidential information, the San Francisco Chroniclereported.Sequoia Capital officials did not return phone calls seekingcomment.UC investments in partnerships managed by Sequoia Capital havereturned over $508 million on an original investment of about $110 million. UCbegan investing in Sequoia Capital years ago.”UC is disappointed thatthe judge did not take into consideration the fact that his decision had alreadycost the university millions of dollars in future returns in exchange for nosignificant increase in the public’s information,” said UC spokesman Trey Davisin a statement. Sequoia Capital’s reaction to the ruling demonstratesthe difficult balancing act public pension funds face in an era of greaterpublic scrutiny. On one side are pension members and individual investorstrying to rebound from a three-year bear market and corporate scandals, and theywant to know where their money is headed. On the other are the venturecapitalists, concerned with upholding the confidentiality of the companies theyinvest in.The state supreme court’s immediate refusal to hear theappeal, however, underscores the fact that California courts have shown a strongtendency to make public entities disclose records of investments made withpublic money. The court took only two days to decline the case.UC isjust one of the public university investment funds in a series that have had todisclose such information because of lawsuits and freedom of informationrequests from the San Jose Mercury News and other mediaorganizations.In 2002, the newspaper successfully sued the CaliforniaState Teachers Retirement System, the largest pension plan in the country,forcing it to disclose its investment records. The University of TexasInvestment Management Co. and the University of Michigan system complied withopen-records requests for similar documents shortly after. The University ofMichigan was also terminated from a new partnership with Sequoia Capital aftermaking its investment records public.UC was the last of the publicuniversity investment funds still declining to release the records. The SanJose Mercury News has published several articles about the internal rate ofreturn records UC released after the ruling, but the most recent article says UChas still failed to disclose “the usual contextual information that mostinstitutions supply with such IRR data.”