California Treasurer Calls For Legislation on Carried Interest Disclosure

California state treasurer John Chiang on Monday called for legislation that would mandate the disclosure of all fees collected by private equity firms from public pension funds – including carried interest.

In a letter to CalPERS and CalSTRS, Chiang urged the funds to work with him to develop the legislation.

More from Reuters:

In a letter to the country’s two largest public pension funds, Chiang said the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, along with other limited partners, “pay excessive fees to private equity firms and do not have sufficient visibility into the nature and amount of those fees.”

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Public pension funds have been under increasing pressure to track fees paid to private equity. Last month, the Institutional Limited Partners Association announced it would seek a better understanding of “all monies paid to the fund manager.” Calpers has said it will begin reporting the amount of carried interest paid to general partners later this year.

Chiang applauded these efforts, but noted “more needs to be done to ensure public pension funds and their trustees have the transparency they need to determine the value of private equity investments.”

Chiang proposed not to impair existing contracts with general partners. Instead, disclosure requirements would include gross management fees, management fee offsets, fund expenses and carried interest, as well as related party transactions.

See Chiang’s letter to CalPERS and CalSTRS here.

Photo by Randy Bayne via Flickr CC License