Del Mar investment advisor Herbert W. Morgan, nominated to the San Diego city retirement board by Mayor Jerry Sanders and confirmed by the city council in April of this year, has filed an amended financial disclosure statement revealing the identity of three clients who are sources of income greater than $10,000 each. Morgan, who joined the board on May 4, had initially declined to disclose the names, arguing that federal securities law protected the privacy of his clients. “To the best of my knowledge none of those customers will make, participate in making or in any way attempt to influence a governmental decision,” he wrote on a state-mandated disclosure statement, dated June 2.
“Eight clients are individuals. To the best of my knowledge, none of the clients has any interest financial or otherwise related to [the retirement fund]. One client is an institution. The institution does not have any business or desire to do business with [the retirement fund] or the City of San Diego.” In a June interview, Morgan said that he would have to resign from the board if required to disclose the names, adding that he needed to shield their identities for competitive reasons.
Following a reporter’s inquiry, Roman Porter, executive director of the California Fair Political Practices Commission, told Morgan in a July 7 letter that state law required him to reveal the clients of the firm, Efficient Market Advisors, LLC, whether or not he quit the board. “Please be advised that failure to comply with the reporting provisions of the Act can result in a fine by the Commission of up to five thousand dollars per violation.”
After some back-and-forth with the commission, Morgan agreed to amend his report to comply with state law. Filed on August 31, it names Robert Bozick, Christa Mueller, and Sand Hill Advisors, LLC, as sources of income that exceed the state’s $10,000 threshold as of the date of his taking office. Sand Hill describes itself on its website as “a leading wealth management firm in the San Francisco Bay Area with over $800 million in assets under its direction” that provides “comprehensive, individualized services for high net-worth clients, including individuals, families, charitable organizations and select institutions.” The company says it provides “access to alternative investments including private equity, hedge funds, natural resources and private real estate.” The two individual clients were not further identified, and there was no explanation regarding why only three clients, not the nine previously mentioned, were disclosed. The FPPC says the others apparently didn’t exceed the $10,000 threshold. Reached by phone this week, Morgan, a Republican who backed John McCain during last year’s presidential race, said he amended his filing after discussions with the FPPC. “I did it because I’m a rule follower. I agree with the rule of law.”