BISMARCK — New Opinion on North Dakota Legacy Fund Disclosures
Administrators of the North Dakota Legacy Fund can now keep the specifics of billions of dollars invested in the fund confidential. This follows a recent opinion issued by Attorney General Drew Wrigley.
Wrigley determined that details specific to managers of commingled funds, which also include investments from other sources, are considered confidential “financial or commercial information.” The Legacy Fund, designed as a fiscal reserve, primarily invests the state’s oil and gas revenues.
Some critics argue that the State Investment Board’s refusal to disclose investment specifics is illegal. They believe that taxpayers deserve to know about the components of at least $3 billion tied up in these combined funds. The fund’s associations with investments in countries like Russia and China have drawn scrutiny, leading to some divestments in these regions.
This recent ruling makes it difficult for the public to access records that would clarify what legacy funds contain, especially for companies involved in less democratic nations.
The Legacy Fund, which collects 30% of the state’s oil and gas earnings, aims to make strategic investments. Tory Jackson, Bismarck’s attorney, commented, “The public should know where their tax dollars are going.” Jackson had sought Wrigley’s opinion after noticing the Office of Retirement Investments failed to provide adequate details in response to a Freedom of Information request.
While Jackson received a list of investments, the specifics about how those funds were allocated were absent. Although mixed investment funds can offer benefits like lower costs, they also come with risks, including insufficient transparency, which poses challenges for assessing potential returns.
Because of this lack of clarity, some state investment offices, such as the one in Nevada, choose to avoid commingled funds altogether in favor of greater control over their portfolios. The information Jackson obtained consisted of broad categories, such as over $160 million categorized under “emerging market regions” and more than $520 million in “global regions,” which he found unhelpful for understanding specific country investments.
Wrigley’s opinion indicated that the details Jackson requested are privileged and not publicly available, thus exempt from open records laws. He noted that this withheld information has commercial value and that the Office of Retirement Investments incurs fees totaling up to $100 million annually for money management.
Wrigley expressed concerns that releasing this data could severely harm the competitive standing of investment managers. Moreover, it could jeopardize the performance of the public funds they oversee, as disclosure might incentivize managers to withdraw from relationships with clients who fail to safeguard investment strategies.
Ultimately, Wrigley found that Jackson’s request for a breakdown by country extended beyond the scope of what public records laws necessitate. He stated that the Investment Authority is not legally obligated to create records that do not exist, affirming that they complied with state law in their response to Jackson.
