State Senator Nancy Skinner recently rewrote SB 54 to require "institutional investors" to submit annually to the Department of Financial Protection & Innovation reports disclosing the following:

• The name of each business to which the institutional investor made an investment during the prior calendar year.

• The total amount the institutional investor invested during the prior calendar year in each business identified.

• All of the following  anonymized information with respect to the founding team of each business identified:

  • The gender of each individual of the founding team.

  • The race of each individual of the founding team.

  • The ethnicity of each individual of the founding team.

  • The disability status of each individual of the founding team.

  • The LGBTQ+ of each individual of the founding team.

• During the prior calendar year, the total amount funded to companies primarily founded by an individual who is female or an individual from an underrepresented community as a percentage of the total number of investments the institutional investor made.

• During the prior calendar year, the total amount of money the institutional investor invested in companies primarily founded by an individual who is female or an individual from an underrepresented community as a percentage of the total amount of money invested by the institutional investor.

If enacted, this reporting obligation would commence on March 1, 2025.   Failure to comply with this reporting requirement could result in a $100,000 penalty per report. 

The bill raises a significant First Amendment Issue.  In general, the government may compel commercial speech if  it can show that mandated commercial disclosures are (i) purely factual; (ii) noncontroversial; and (iii) not unjustified or unduly burdensome.  See Zauderer v. Office of Disciplinary Counsel of Sup. Ct. of Ohio, 471 U.S. 626 (1985).  At a minimum, prying into the gender, racial, ethnic, dis ability, and sexual preference status of other companies would seem to be an undue burden, if not an invasion of privacy.   

Regardless of the bill's constitutionality, it is so poorly drafted as to amount to gibberish.