What’s Secret and What’s Not Under F.S. 215.4401

Florida lawmakers, urged by the SBA, passed a F.S. 215.4401 in 2006 to keep vast amounts of information about private equity partnerships and hedge funds, so-called alternative investments, as secret and shielded from release under Florida’s public records law. The legislature re-authorized the law in 2011, and added a designation that fees paid to those soliciting the SBA to make an alternative investment are public record.

The law allows companies to keep secret:

■ Trade secrets

■ Information provided to the State Board of Administration regarding a prospective investment in a private equity fund, venture fund, hedge fund, distress fund, or portfolio company which is proprietary to the provider of the information.

■ Financial statements and auditor reports of an alternative investment vehicle.

■ Meeting materials of an alternative investment vehicle relating to financial, operating, or marketing information of the alternative investment vehicle.

■ Information regarding the portfolio positions in which the alternative investment vehicles invest.

■ Capital call and distribution notices to investors of an alternative investment vehicle.

■ Alternative investment agreements and related records.

■ Information concerning investors, other than the State Board of Administration, in an alternative investment vehicle.

But basic information about alternative investment performance is required to be disclosed as public record. The law specifically says that the following are not exempt as confidential proprietary business information and therefore must be disclosed under Florida’s public records law:

a. The name, address, and vintage year of an alternative investment vehicle and the identity of the principals involved in the management of the alternative investment vehicle.

b. The dollar amount of the commitment made by the State Board of Administration to each alternative investment vehicle since inception.

c. The dollar amount and date of cash contributions made by the State Board of Administration to each alternative investment vehicle since inception.

d. The dollar amount, on a fiscal-year-end basis, of cash distributions received by the State Board of Administration from each alternative investment vehicle.

e. The dollar amount, on a fiscal-year-end basis, of cash distributions received by the State Board of Administration plus the remaining value of alternative-vehicle assets that are attributable to the State Board of Administration’s investment in each alternative investment vehicle.

f. The net internal rate of return of each alternative investment vehicle since inception.

g. The investment multiple of each alternative investment vehicle since inception.

h. The dollar amount of the total management fees and costs paid on an annual fiscal-year-end basis by the State Board of Administration to each alternative investment vehicle.

i. The dollar amount of cash profit received by the State Board of Administration from each alternative investment vehicle on a fiscal-year-end basis.

j. A description of any compensation, fees, or expenses, including the amount or value, paid or agreed to be paid by a proprietor to any person to solicit the board to make an alternative investment or investment through an alternative investment vehicle. This does not apply to an executive officer, general partner, managing member, or other employee of the proprietor, who is paid by the proprietor to solicit the board to make such investments.

The law also states that proprietary confidential business information that is exempt from public records laws can remain hidden from public scrutiny for 10 years after an investment is closed.

The law spells out that a citizen may file a petition in court in Leon County for public release of the records considered to be proprietary confidential business information if “a compelling public interest is served” by the release of the records.

To read the full law see: Florida Statute 215.4401