Last Friday, I lamented the inadequacy of the notice given by the Investor Advisory Committee for the Securities and Exchange Commission. Not only was notice very short – three days; it requested comments on materials unavailable to the public – the recommendations of a subcommittee with respect to the Jumpstart Our Business Startups (JOBS) Act requirements on general solicitation and general advertising in Rule 506. Clearly, the opportunity for public comment on this important issue was meaningless.
This week, the California Public Employees’ Retirement System’ Board Governance Committee will consider a policy on confidentiality for members of the Board of Administration. The stated purpose of the policy is to “ensure that CalPERS Board Members understand their legal and fiduciary duties to keep this information confidential.” To practitioners who advise corporate boards, this may seem entirely reasonable. CalPERS, however, is fundamentally different from a private corporation. It is a state agency. As such, it is subject to California’s Public Records Act. Cal. Govt. Code § 6250 et seq.
Under the PRA, the public has a right of access to public records, unless the legislature has specifically excepted those records. In other words, “all public records are subject to disclosure unless the Legislature has expressly provided to the contrary.” Williams v. Superior Court, 4 Cal. 4th 337, 346 (1993). Unfortunately, the proposed CalPERS board policy is so general that it conflicts with the Public Records Act. For example, the policy defines “confidential information” by reference to broad categories of information (e.g., “[c]onfidential contract, financial, investment, and legal information”). While selected portions of the information included within these categories may be excepted from disclosure under the Public Records Act, the public has a right to access most of the information within these categories. The Policy also defines “confidential information” to include “[o]ther information identified as confidential”. Neither CalPERS nor any other person can sequester information from public access simply by declaring it to be confidential.
The policy provides no meaningful guidance because it incorrectly identifies some information as confidential that is legally required to be available to the public. The policy also fails to provide guidance because its definition of “confidential information” is circular. For example, it defines “confidential information” as “[c]onfidential contract, financial, investment and legal information”. In essence, the policy defines confidential information as confidential information. Obviously, this definition is neither meaningful nor helpful. Consequently, the policy is will not achieve its stated purpose.
Finally, CalPERS must adopt the policy after complying with the notice and comment procedures of the California Administrative Procedure Act. Because the policy will define CalPERS’ procedure it is a regulation. Cal Govt. Code § 11342.600.