Givan, Jay v. West Boylston, Town of - Town Administrator (SPR 20150284)

The Commonwealth of Massachusetts William Francis Galvin, Secretary of the Commonwealth Public Records Division

Shawn A. Williams Supervisor of Records

September 10, 2015 SPR15/347

Ms. Elissa Flynn-Poppey, Esq.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center

Boston, MA 02111

Dear Attorney Flynn-Poppey:

I have received the petition of Matthew Cunningham-Cook appealing the response of Massachusetts Pension Reserves Investment Management Board (PRIM) to his request for public records. G. L. c. 66 § 10(b); see also 950 C.M.R. 32.08(2). Mr. Cunningham-Cook originally requested copies of “records used to make the assertion that [PRIM] leads the nation in private equity performance.”

Previous Appeal

This request was the subject of a previous appeal. See SPR14/393 Determinations of the Supervisor of Records (October 6, 2014, December 17, 2014). In the October 6 order I found that PRIM failed to satisfy its burden of specificity in its denial .of access to public records. I ordered PRIM to produce the requested records or provide this office with a detailed explanation regarding its exemption claim.

In response to the October 6 order, PRIM provided Mr. Cunningham-Cook with a letter dated November 5, 2014. This response stated that it is unclear whether the request was related to “records pertaining only to PRIM’s Private Equity program at the overall portfolio level,” or “records pertaining to each of PRIM’s several hundred Private Equity partnership fund investments.” This November 5 response also discussed PRIM’s claim that certain responsive records are exempt from disclosure under Exemption (a) of the Public Records Law. G. L. c. 4, § 7(26)(a); G. L. c. 32, § 23(6).

In an order dated December 17, 2014, I found PRIM had not yet determined what records

were responsive to the request and ordered PRIM to respond directly to Mr. Cunningham-Cook’s

One Ashburton Place, Room 1719, Boston, Massachusetts 02108 - (617) 727-2832 - Fax (617) 727-5914 www.sec.state.ma.us/pre

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June 2014 request in a manner consistent with that order, the Public Records Law and its Access Regulations (Regulations).

In response to the December 17 order, PRIM provided Mr. Cunningham-Cook with a letter dated January 22, 2015. This response contains several hyperlinks directing Mr. Cunningham-Cook to records responsive to his request for “overall portfolio level” records. However, in this response, PRIM maintains “the individual fund and manager level records” are exempt from disclosure under Exemption (a) of the Public Records Law. G. L. c. 4, § 7(26)(a); G. L. c. 32, § 23(6).

Current Appeal

As indicated in Mr. Cunningham-Cook’s latest appeal, he is now seeking “cash flow reports at the individual fund level.” Whereas Mr. Cunningham-Cook’s appeal only addresses records at the individual fund level, I will consider his request for records at the “overall portfolio level” closed. Accordingly, this determination will only analyze PRIM’s claim that G. L. c. 32, § 23(6), as it operates through Exemption (a), allows for the withholding of cash flow reports at the individual fund level.

Exemption (a)

Exemption (a), known as the statutory exemption, permits the withholding of records that are: specifically or by necessary implication exempted from disclosure by statute

G. L. ¢. 4, §7 (26)(a)

A governmental entity may use the statutory exemption as a basis for withholding requested materials where the language of the exempting statute relied upon expressly or necessarily implies that the public’s right to inspect records under the Public Records Law is restricted. See Attorney Gen. v. Collector of Lynn, 377 Mass. 151, 54 (1979); Ottaway Newspapers, Inc. v. Appeals Court, 372 Mass. 539, 545-46 (1977).

This exemption creates two categories of exempt records. The first category includes records that are specifically exempt from disclosure by statute. Such statutes expressly state that such a record either “shall not be a public record,” “shall be kept confidential” or “shall not be subject to the disclosure provision of the Public Records Law.”

The second category under the exemption includes records deemed exempt under statute by necessary implication. Such statutes expressly limit the dissemination of particular records to a defined group of individuals or entities. A statute is not a basis for

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exemption if it merely lists individuals or entities to whom the records are to be provided; the statute must expressly limit access to the listed individuals or entities.

G. L. c. 32, § 23(6) governs the management of funds in retirement systems and pensions. The statute provides in relevant part:

(6) Confidentiality of certain records. Any documentary material or data made or received by a member of the PRIM board which consists of trade secrets or commercial or financial information that relates to the investment of public trust or retirement funds, shall not be disclosed to the public if disclosure is likely to impair the government’s ability to obtain such information in the future or is likely to cause substantial harm to the competitive position of the person or entity from whom the information was obtained. The provisions of the open meeting law shall not apply to the PRIM board when it is discussing the information described in this subdivision. This subdivision shall apply to any request for information covered by this subdivision for which no disclosure has been made by the effective date of this subdivision.

G.L. c. 32, § 23(6)

As discussed in both the November 5 and January 22 letters, PRIM claims the individual fund and manager level records are both “trade secrets” and “commercial or financial information” the disclosure of which would “impair the government’s ability to obtain such information in the future” or be “likely to cause substantial harm to the competitive position of the person or entity from whom the information was obtained.”

PRIM states that individual fund level records consist of over 9,000 General Partner Investment Reports, 9,000 General Partner Quarterly Statements, and 9,000 Annual Capital Account Statements. PRIM further explains that the responsive records also encompass performance and strategy for PRIM’s Private Equity managers. With regard to “cash flow reports,” you informed a member of my staff that these records contain data that is financial information pertaining to fund performance, reconciliation of accounts, and associated costs. In addition, you indicated that access to these reports is limited and that this information is highly protected by several security measures including encryption and passwords.

In its January 22 response, PRIM claims the Private Equity firms “only provide this information to PRIM with the explicit understanding and written agreement that the information is to be kept confidential and protected.” PRIM states it maintains the confidentiality of a variety of records including reports, prospectus, annual statements, quarterly statements, and information on investment strategy. PRIM explains that without this assurance of confidentiality, “not only would the Private Equity firms withhold the information from us, but we would not be admitted into the partnerships and we would lose these valuable investment opportunities.” Further,

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PRIM states the Private Equity firms “would withhold the information from us to prevent further disclosure.”

PRIM further explains that disclosing the requested information would provide the Private Equity firms’ competitors “an unfair competitive advantage, resulting in harm to the Private Equity firms in which PRIM invests.” PRIM explains that the Private Equity firms benefit from the requested commercial and financial information “precisely because it is not known by or available to their competitors.” As a result, PRIM claims that often the success of investment strategies depends on the confidentiality of this information. If not kept confidential, PRIM claims the Private Equity firms and their limited partners would lose value in their investments which would damage the pensions of retirees and employees. This contention is supported by the fact that access to cash flow information is limited by several security measures.

As aresult, I find PRIM has met its burden in proving that the requested cash flow reports at the individual fund level are “commercial or financial information that relates to the investment of public trust or retirement funds” whose disclosure “‘is likely to impair the government’s ability to obtain such information in the future” or “is likely to cause substantial harm to the competitive position of the person or entity from whom the information was obtained” as required by G. L. c. 32, § 23(6).

Accordingly, I find PRIM has met its burden in proving that the cash flow reports at the individual fund level are specifically exempt from disclosure by G. L. c. 32, § 23(6) as it operates through Exemption (a), Whereas the PRIM properly withheld the requested records under Exemption (a), I will consider this administrative appeal closed.

cc: Mr. Matthew Cunningham-Cook Ms. Ellen M. Hennessy