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California DFPI Seeks Reporting Mandate for Venture Capital Funding

Why is the DFPI requesting funding to implement the venture capital financing reporting mandate?

Last year, the California Legislature passed a bill, SB 54 (Skinner), that would require a “venture capital firm” to report annually to the Civil Rights Department on its financing decisions regarding companies created primarily by various members of the founding team. The bill passed despite its significant shortcomings, including Governor Gavin Newsom’s signing message:

However, this bill contains problematic provisions and unrealistic timelines that could pose barriers to successful implementation and enforcement. Within California’s large and complex venture capital environment, this bill would require CRD (Civil Rights Division) to conduct significant and ongoing investigations to determine whether a particular entity meets the criteria set forth in the bill – and the Department is not in the position to carry this out. work. Furthermore, building this expertise, as well as the resulting work in administering the law, places significant, ongoing pressure on General Fund costs.

“Trailers for sale or rent…”

Last week I noted that the governor is asking for more than $1.5 million for funding and three positions to implement the bill. Despite the fact that the passage of the bill hinders the implementation of this law in the Department of Civil Rights, the governor is requesting funding for the Ministry of Financial Protection and Innovation. So it appears the government will be looking for a “trailer bill” to shift responsibility to the DFPI.