Should the State Invest in Private Companies?

Constitutional Amendment E would allow the State Treasurer to invest in private companies.

I am very surprised that the Voter Information Pamphlet does not include opposing arguments. The argument in favor says, “In order to operate effectively in today’s financial markets, the State Treasurer must be able to diversify school and institutional trust fund portfolios in an appropriate manner, consistent with the prudent investor standard.”

Private companies do not have to adhere to the same financial reporting standards as public companies. Even receiving financial statements may be difficult which makes it hard to determine how your investment is performing. Private companies do not have to disclose ownership which makes it difficult to safeguard against conflict of interest. Since holdings in private companies do not have a ready market, selling your shares can be difficult.  

There are literally thousands of public investment opportunities available. The State Treasurer can do just fine with the options at hand without a change in the State Constitution.