Dear Friends, Colleagues, and Readers;

     This is an appeal for contributions, seeking your financial support for a lawsuit that was filed yesterday against The Regents of the University of California.  The immediate issue is access to public records concerning their investment policy decisions, which were considered in secret meetings over the past three years. The larger issues concern the trustworthiness of top University officials and the protection  of UC's pension funds and endowment funds.

     In the summer of 2000, many of us were startled to learn that the UC Regents had made some fundamental changes in their management of the $50 Billion investments of the UC Retirement Plan and other funds entrusted to their care. After bringing in an outside investment consultant (Wilshire Associates, Inc.), they pushed out UC's  long-time Treasurer, Patricia Small.  This action was the culmination of nearly two years of planning and internal reviews, under the leadership of Regent Gerald Parsky, all of which was kept secret from the rest of us -- UC's employees and retirees and the general public.

     Stimulated by those newspaper reports, I began an inquiry, seeking all available public records from top UC officials.  A number of documents were provided, including the main  report from Wilshire, their "Investment Strategy Study"; but the most crucial documents were denied:  minutes of the closed meetings in January and March of 2000, when the Wilshire policies were discussed and then adopted by the Board of Regents.

     Over the months since then I have written a series of critiques which are based upon the available public documents and direct observation of regents' meetings. This series of papers is posted on the web at http://ocf.berkeley.edu/~schwrtz  and has been widely circulated to University officials.  Although these critiques point out many instances of Wilshire's error, neglect, incompetence and bias, they have had no discernable effect upon UC's top officials.

     This last fall, the Regents took some even more drastic steps.  Led by Regent Parsky, the Wilshire consultant and the new UC Treasurer they hired, and deliberating in more secret sessions, they fired the entire equity investment staff and announced that $15 Billion in UC investments would be handed out to private companies under a new  Multiple Manager Investment Strategy. For detailed critiques of this latest move, alleging incompetence and/or dishonest manipulations, see Parts 13-17 of the posted series.

     In partnership with the Coalition of University Employees (CUE), the union which represents 18,000 clericals throughout the University of California, we have engaged legal talent to press our requests for public records on these investment policy matters. The San Jose Mercury News has also joined as a plaintiff in this suit, seeking further details about UC's investments. (My own status is, in part, that of a university researcher whose access to essential public documents has been illegally blocked by officials, who just happen to be my own University's governors. Of course, as a UC retiree, I also have a personal interest.)

     Karl Olson, of the firm of Levy, Ram & Olson in San Francisco, and Judy Alexander, of the firm of Winn & Alexander in Capitola, are both experts in this area of Public Records Law and Open Meetings Law.  They recently won a favorable settlement in a case brought by the Mercury News against CalPERS (California Public Employees' Retirement System), seeking public release of data on their private equity investments.  That same issue is now part of our suit against The Regents.

     Hiring attorneys costs money (I had previously sought pro bono representation from various experts, to no avail).  CUE put up $5,000 for an initial attempt by our lawyer to seek release of relevant documents from the University.  Their response was to provide a few documents but to deny us the most crucial ones: minutes and tapes from the closed meetings of the regents when fundamental shifts in investment policy and strategy were discussed and adopted. UC also denied release of data on the "internal rate of return" of individual venture capital investments, even though several other public pension funds now routinely disclose this same information.
 
     While we recognize the rationale for closed meetings and secret documents when the topic is whether to buy or sell particular stocks, etc., we believe that the broader consideration of investment policy should be open to public scrutiny -- certainly after any relevant transactions have been completed.  But UC insists on keeping the regents' deliberations secret.

     So now we are facing the reality of a costly court battle.  Estimates of the ultimate cost are in the five-figure range; it all depends on how difficult UC's lawyers make it to get a judgment.  The law allows a successful plaintiff to ultimately recover legal costs; but that is a distant prospect and not something to be relied upon at this stage.

     This is what leads me to the present appeal for financial assistance.  I believe that CUE, which has made a further commitment of very significant funding for the lawsuit, should not bear the financial burden alone.  Hopefully some other UC employee organizations will make a contribution; and I am addressing this appeal especially to my UC faculty colleagues, and to all other readers of my series, asking you to consider making a financial contribution.   If you would like to see more documentation or if you have other questions about this whole affair, please contact me. (email:  schwartz@physics.berkeley.edu )

     If you wish to make a personal financial contribution or pledge in support of this legal action, please let me know and I will keep you posted.  Thanks for any consideration.
 

          Sincerely,

          Charlie Schwartz