In a recent letter to the SEC, a group of state treasuries and other officers representing 13 states, voiced concern about the lack of sufficient disclosure of fees paid by public pensions invested in private equity funds. As more and more pension plans make investments in private equity funds, the concern by such public officials is the inability to know, at least on a frequent enough basis, the fees being paid.

The problem of insufficient disclosure arises from the private equity manager’s desire to keep such information away from the public domain (at least until the annual audit has been completed) and the public requirement under state laws, to have such information readily available. Pension plans, in search for higher returns than what is typically found from investments in publically traded stocks and bonds, are increasingly looking to invest a greater amount of public money in private equity investments. The government officials are urging the SEC to require the managers of such finds to provide the pension plans and other investors with enhanced and more frequent fee disclosures.