The University of California may have to change the way it reports its investments if the three parties who are suing it win their case.

The San Jose Mercury News, the Coalition of University Employees (C.U.E.) and UC Berkeley Professor Emeritus Charles Schwarz have filed a joint suit against the University of California in Alameda County Superior Court this week to obtain access to performance records for individual venture capital funds the University has invested in. The lawsuit follows UC’s denial of access to the records on grounds that confidentiality agreements release it from public disclosure obligations.

The San Jose Mercury News filed a public records request October 2002 for information regarding the internal rates of return for individual venture capital partnerships, but was denied the records on grounds that the University had signed confidentiality agreements concerning several private equity partnerships.

“This is a common practice in venture capital, and without [the confidentiality agreements], the University risks being shut out of these premier investment opportunities, especially the top-tier funds,” University spokesman Trey Davis said in a statement. “While the University does not disclose internal rates of return on individual partnerships, it publicly reports annually and quarterly the aggregate performance of its total private equity partnerships.”

Davis said UC denied the request because the information is exempt from public disclosure laws due to confidentiality agreements that are vital to the transactions. His statement said releasing the information would be harmful to public interest; it would limit the University’s ability to invest in top private equity funds in the future. Davis’ statement said the private equity funds are some of the University’s best investments. The University also said the information requested is a trade secret and the University only received it because it signed the confidentiality agreements.

The San Jose Mercury News won a lawsuit recently against the California Public Employees’ Retirement System (CalPERS), requiring it to disclose similar information. Davis said CalPERS only has to disclose the internal rates of return from their private equity partnerships with permission from the general partner.

The request for information regarding the private investments came after the UC’s annual reports showed the value of its retirement endowments fell 10.7 percent last year, the second largest loss for an American public university.

C.U.E. decided to join the lawsuit because it says the investments affect the retirement funds many former C.U.E. members depend on and current members will depend on in the future. The UC retirement plan manages $34 billion for 173,343 current and former employees.

“The [UC] Regents control the retirement security for the 18,000 C.U.E. employees and they have be accountable to them and to the millions of California taxpayers for the investments they make,” C.U.E. attorney Karl Olson said. “They’ve lost a lot of money in the last few years and we have the right to know where that money is going.”

Schwartz, a professor emeritus in UC Berkeley’s Physics Dept., is a self-proclaimed watchdog of UC’s retirement investments. He has written a 17-part series of critiques on UC’s investment practices, which is published online.

Schwartz was not available for comment.

UC is a limited partner in several private equity partnerships and invests its funds with a general partner, which makes decisions regarding the investments. UC claims its venture capital investments are doing fine and the investments for which the plaintiffs requested information take seven to 10 years to mature. Davis said UC has made returns of 35.9 percent over the past 10 years, and 32.5 percent over the past five years on the investments.

“For the year ending June 30, 2002, UC’s private equity performance has been stellar,” Davis’ statement said.