On Sunday, I filed a complaint against Sophie Hahn, Mayoral candidate in Berkeley, with the state’s Fair Political Practices Commission (FPPC).
The complaint states that Ms. Hahn failed to disclose her family’s income and stock holdings as required by law.
My 6 page complaint, accompanied by 24 exhibits, shows that since 2020, Ms. Hahn failed to disclose both her share of her husband’s income which exceeded over $500,000 per year as well as family stock holdings that exceed $4 million.
Both of these disclosures are required by California law. The purpose of these laws is to allow California citizens to know the financial interests, and potential conflicts of interest, of those we elect.
Almost all of this income is associated with Biotech, which raises concerns over Ms. Hahn’s voting on these issues. It was Ms. Hahn’s recent vote to evict artists from the Fantasy Studios building in Berkeley to be replaced by Biotech firms that first raised my interest in Ms. Hahn’s finances. Ms. Hahn’s vote overturned the recommendation of Berkeley’s Zoning Adjustment Board which twice turned down this action.
Berkeley will soon be considering granting tax breaks to Biotech firms locating in Berkeley as well eliminating the requirement that Biotech firms need to be located more than 500 feet from residences.
A recent complaint to Berkeley’s City Attorney argued that Ms. Hahn should have recused herself from voting on the Fantasy Studios conversion given the large amount of funds donated to her by biotech interests. 21 biotech executives, only three of which lived in Berkeley, have each donated to Ms. Hahn’s campaign, most at the maximum level of campaign contribution.
This led me in turn to examining Ms. Hahn’s annual disclosure statements of income and investments to the state’s FPPC.
In her FPPC Form 700 filings, dating back to 2020, if not earlier, it appears Ms. Hahn failed to report, as required by the FPPC, her 50% share of yearly earnings from her spouse, who is currently Chief Financial Officer (CFO) of Mirum Pharmaceuticals, a biotechnology company. These earnings averaged at least $500,000 per year during this period and were closer to $1 million/year for 2023 and 2024.
A recent Securities and Exchange Commission (SEC) filing listed Ms. Hahn’s spouse compensation at $4,337,928 for 2023 although this included stock options that may not yet have been awarded.
Ms. Hahn also appeared not to report (other than 2020), as required by the FPPC, her family’s substantial stock holdings in various biotechnology companies. These holdings have been estimated as high as $4 million.
The egregious extent of this under-reporting is particularly troubling given Ms. Hahn’s supposed legal expertise as a graduate of Stanford Law School, and her husband’s work experience as a Chief Financial Officer responsible for numerous SEC and government filings.
This lack of reporting should not be the result of lack of knowledge or unfamiliarity with reviewing necessary filing requirements.
SUMMARY
Sophie Hahn (Ms. Hahn) is both a current City Councilmember for the City of Berkeley, first elected in November, 2016, and also a candidate for Mayor of Berkeley in the upcoming November 5, 2024 election. In her FPPC Form 700 filings, dating back to 2020, if not earlier, it appears Ms. Hahn failed to report, as required by the FPPC, her 50% share of yearly earnings from her spouse (Mr. Eric Bjerkholt), currently Chief Financial Officer (CFO) of Mirum Pharmaceuticals, a biotechnology company. These earnings likely averaged at least $500,000 per year during this period and were closer to $1 million/year for 2023 and 2024. A recent Securities and Exchange Commission (SEC) filing listed Mr. Bjerkholt’s compensation at $4,337,928 for 2023 although this included stock options that may not yet have been awarded. (Ex. 1) Ms. Hahn also appeared not to report (other than 2020), as required by the FPPC, her family’s substantial stock holdings in various biotechnology companies. These holdings have been estimated as high as $4 million. (Ex. 2).
The above figures are based on publicly available SEC filings. Therefore, they exclude any additional reportable investments (also likely to be substantial) in the Hahn/Bjerkholt personal investment portfolio.
The failure to disclose these revenue sources and investments is of concern as Ms. Hahn, in her role as councilmember, routinely votes on land use decisions involving biotechnology companies. This includes her;
Recent vote on July 30, 2024 to rezone from arts usage to biotech usage the Fantasy Studio site, over-turning the recommendation of Berkeley’s Zoning Adjustment Board, which had twice turned down this rezoning request (Ex. 3);
Approval of the 600 Addison Street project, a major biotech facility (Ex. 4);
Approval of an agreement between the University of California (the leading biotech university in the country) and the City of Berkeley that will have significant effects on land use decisions within Berkeley.
Additionally, if elected Mayor, Ms. Hahn would also be voting on, and overseeing City management, in an upcoming proposal to convert a former steel factory into a 900,000 square foot R&D/biotech hub that could accommodate up to 4,500 employees. (Ex. 5) This is in addition to on-going decisions regarding business taxes, regulation, land use decisions etc. that routinely come before the City Council.
While not asking the FPPC to weigh in on the appropriateness of Ms. Hahn’s participation in the above decisions (using the “eight-factor” conflict test), it is appropriate that Berkeley’s citizens and voters know of Ms. Hahn’s underlying financial interests that could color her decision-making process. This is one of the main goals of the Form 700 reporting requirements.
The egregious extent of this under-reporting is particularly troubling given Ms. Hahn’s legal expertise as a graduate of Stanford Law School, and her husband’s work experience as a Chief Financial Officer responsible for numerous SEC and government filings. This lack of reporting should not be the result of lack of knowledge or unfamiliarity with reviewing necessary filing requirements.
FAILURE TO REPORT INCOME
Sophie Hahn (Ms. Hahn) is both a current City Councilmember for the City of Berkeley, first elected in 2016, and also a candidate for Mayor of Berkeley in the upcoming November 5, 2024 election. Ms. Hahn has filed the corresponding FPPC Form 700 forms for 2017 (as a Council candidate) and calendar years 2018 through 2023 in her role as Councilmember. On August 8, 2024 she filed her FPPC Form 700 as a Mayoral candidate which covers the previous 12 months.
Other than for calendar year 2020 (discussed below). Ms. Hahn did not list any income from her husband’s activities. This is required under FPPC rules which state that; “Generally an elected official is required to report his or her community property share (50%) of his or her spouse’s or registered domestic partner’s salary.” (FPPC Frequently Asked Questions; Form 700 Disclosure, p. 2)
The potential amount of unreported income over Ms. Hahn’s term as Councilmember is substantial. As described by Businesswire upon Mr. Bjerkholt’s (Ms. Hahn’s spouse) appointment as CFO of Mirum Pharmaceuticals in September, 2023;
Mr. Bjerkholt…comes to Mirum from Chinook Therapeutics, Inc., where he served as CFO overseeing financial reporting, planning and budgeting, internal controls, investor relations, facilities, and information technology functions. Prior to Chinook, he served as CFO at Aimmune Therapeutics, Inc… He is currently a member of the board of directors of CalciMedica, Inc., Cerus Corporation and Surrozen, Inc. (Ex. 6)
Other than reporting on her 2020 filing Mr. Bjerkholt’s salary for serving as CFO of Chinook Pharmaceuticals, none of these positions appear in Ms. Hahn’s FPPC Form 700 filings.
The following compares Ms. Hahn’s FPPC Form 700 filings with her spouse’s earnings for the 2017 through 2024 period.
2023 FPPC Form 700 and 2024 FPPC Form 700 (Mayoral Candidate) -- MIRUM Pharmaceuticals
In 2023, according to SEC filings, Mr. Bjerkholt received;
$4,337,928 in compensation for Fiscal Year 2023 for serving as the CFO of Mirum Pharmaceuticals. $246,808 of this was in cash compensation with the remainder $4,091,120 in stock and options. (Ex. 1)
As many of the stock options may not have been realized during the FPPC reporting period, Yahoo Finance listed Mr. Bjerkholt’s compensation for the year at $600,000.(Ex. 7)
None of the proportional share of this income attributable to Ms. Hahn was reported on either Ms. Hahn’s 2023 FPPC Form 700 filing as a Councilmember or her Mayoral filing which would cover the time period from August, 2023 to August, 2024.
2023 FPPC Form 700 and 2024 FPPC Form 700 (Mayoral Candidate) -- CalciMedica, Inc., Cerus Corporation and Surrozen, Inc.
In addition to serving as CFO, Ms. Hahn’s spouse also was compensated for serving on the Board of Directors for several companies.
In 2023 according to Salary.com, SEC filings, and annual reports, Mr. Bjerkholt’s compensation for these positions was close to $300,000 including;
$150,000 from Cerus Corporation (Ex. 8)
$93,000 from CalciMedica Pharmaceutical (Ex. 9); and
$57,000 from Surrozen Corporation. (Ex. 10)
Combined with his compensation from MRUM, total compensation could easily exceed $1 million per year.
For 2024, these earnings should be similar, if not greater.
Once again, none of this income was reported on Ms. Hahn’s FPPC Form 700 filings.
2021 and 2022 FPPC Form 700 -- Cerus Corporation, Surrozen, Inc., and Graybug Vision
Going back slightly further for reporting years 2021 and 2022, additional income from Board positions continues to be not be reported on Ms. Hahn’s FPPC Form 700 filings.
At a minimum this includes;
$250,000 from Cerus Corporation (Ex. 11)
$94.000 from Graybug Vision (subsequently acquired by CalciMedica (Ex. 12)
2020 to 2023 FPPC Form 700s – Chinook Pharmaceutical
Starting in October, 2020 and continuing until sometime in 2023, Mr. Bjerkholt served as CFO for Chinook Pharmaceuticals. According to a SEC Form-8K filing, Mr. Bjerkholt’s salary in 2020 was a minimum of $430,000 per year exclusive of bonuses (up to 30% of salary or an additional $123,000/year) and stock options. (Ex. 13) It likely was the same, if not significantly higher for 2021 and 2022 based on the terms of his contract as described in this same SEC 8-K filing. (Ibid)
Only for her 2020 FPPC filing, did Ms. Hahn report her proportional share of her spouse’s earnings. Her spouse’s earnings for 2021, 2022, and 2023 were not reported.
2017 to 2020 FPPC Form 700 – Aimmune Therapeutics
When elected to Council in late 2016, Ms. Hahn’s spouse was CFO of Aimmune Therapeutics. As SEC filings were not reviewed for this time period, we are unsure what Mr. Bjerkholt’s salary and compensation was during this period. Mr. Bjerkholt’s ownership and sale of Aimmune stock is discussed below.
None of the proportional share of this income attributable to Ms. Hahn was reported on the corresponding FPPC Form 700 filings.
FAILURE TO REPORT OWNERSHIP OF STOCK
In addition to not reporting income as required by the FPPC, it appears Ms. Hahn also did not report stock holdings of her husband and family. As the FPPC requires; “ Even if a public official and his or her spouse have a separate property agreement, the spouse’s investments and interests in real property must still be disclosed because the definitions of reportable investments and interests in real property include those held by the official’s immediate family (spouse, registered domestic partner, and dependent children).”
Gurufocus, which tracks stock ownership by corporate executives describes (albeit incorrectly) Mr. Bjerkholt’s stockholdings as;
While the problem with the above description is that is incorrectly assumes that Mr. Bjerkhjolt still holds each of the above stocks as of September, 2024, it does provide a useful starting point to work backward to determine Mr. Bjerkholt’s investments over the 2017-2024 FPPC reporting obligations.
First, as noted, Mr. Bjerkholt currently owns at least 14,000 shares of MIRUM stock as of March 27, 2024 as confirmed by SecForm4.com which tracks SEC compliance filings. These were worth $347,200 at time of purchase (Ex. 14,p. 1 of 5). Mr. Bjerkholt is reported as exercising an option for an additional 18,334 shares on September 12, 2024 bringing his total ownership to 69,470 shares. (Ex. 14, p. 2 of 5)
None of this ownership was reported by Ms. Hahn on either her 2023 Council or 2024 Mayoral candidate FPPC Form 700 filings.
Second, is Mr. Bjerkholt’s holdings in Chinook Pharmaceuticals. This stock would have been acquired during Mr. Bjerkholt’s tenure as CFO of Chinook from 2020 through 2023. This stock was most likely sold in August, 2023, as confirmed by Secform4.com (Ex. 14, p. 3 of 5,Ex. 15), when pharmaceutical giant Novartis acquired Chinook for $3.5 billion. As noted in these exhibits this appeared to include exercising somewhere around 300,000 stock options at a price of around $26. (Ex. 14, p. 3 of 5, Ex. 15)
Although Ms. Hahn did report some of this stock on her 2020 FPPC Form 700 filing, it was not subsequently updated to reflect additional purchases/options on her 2021, 2022, or 2023 FPPC Form 700 reports. Neither was the disposition of this stock in 2023 reported.
Third, is Mr. Bjerkholt’s holdings in Aimmunity which also likely date back to his time as CFO of Aimmunity from 2017-2020. Similar to Chinook, Mr. Bjerkholt likely disposed of these stocks when Nestle Corporation bought out Aimmunity in 2020. (Ex. 16)
Once again, there is no record of these stockholdings on Ms. Hahn’s FPPC Form 700 filings,
Finally, as noted above, in his position as Director of various firms, Mr. Bjerkholt has received stock from these firms. (See Ex. 14 for Cerus, . and Ex. 9 and Ex. 10 for CalciMedica and Surrozen.) None of these stocks are listed on any of Ms. Hahn’s FPPC Form 700 filings.
A full list of Mr. Bjerkholt’s stock transactions (purchase, sales, exercise of option rights, etc.) based on SEC Form 4 filings is attached to this filing. (Ex. 14) It has not been reviewed in detail for additional stockholding that should have been reported.
FAILURE TO MEET REPORTING OBLIGATIONS
The FPPC requires that salaries and income must be reported “if the source is located in, doing business in, planning to do business in, or has done business during the previous two years” in the reporting party’s jurisdiction. (FPPC Form 700, Instructions Schedule C). Investments are similarly reportable “if business entity or any parent, subsidiary, or otherwise related business entity has an interest in real property in the jurisdiction, or does business or plans to do business in the jurisdiction, or has done business within the jurisdiction at any time during the two years prior to the time any [FPPC reporting] statement” is due. (Government Code 82034).
Substantially all of the above income and investments meet these criteria.
All of the above listed companies are listed on NASDAQ and thus have offered to sell their securities nation-, if not world-wide, including within Berkeley.
Second, many of these companies already offer FDA-approved products for sale, or are “planning” to sell their products once they receive FDA-approval. This approval is nationwide, and these companies have not, and likely could not, preclude sales just within the Berkeley area.
MIRUM Pharmaceutical’s 2023 and 2024 revenues are around $250 million/year (Ex. 17) much of which is associated with their FDA-approved Livmarli. MIRUM also has Cholbam, approved by the FDA in 2015 (Ex. 18).
Cerus Corporation, with 2023 revenues of $150 million markets and sells the INTERCEPT Blood System for both platelets and plasma in the United States. (Ex. 19)
Aimmune Therapeutics received FDA-approval in February, 2020 (during Mr. Bjerkholt’s tenure as CFO) for its Palforzia drug for treating peanut allergies which resulted in Nestle purchasing Aimmune for $1.6 billion in 2020. (Ex. 16)
For some of the other companies listed above (e.g. CalciMedia and Surrozen), they have pharmaceuticals which are in the drug development “pipeline” and thus “planned” for sale to Berkeley (as well as the entire United States) but may not currently have FDA approval.
Addtionally, as biotechnology firms, many of the above companies likely have licensing/patent agreements (as in the case of Chinook Pharmaceuticals noted below) with the University of California and/or consulting agreements with U.C. Berkeley faculty. The University of California, for example, holds almost 7% of the stock of Surrozen, Inc. upon whose board Mr. Bjerkholt serves. (Ex. 20)
As noted above, Ms. Hahn did report her share of her husband’s salary and stockholdings in Chinook Pharmaceuticals but only for her 2020 FPPC filing. Chinook Pharmaceutical is the successor to Aduro Pharmaceuticals, through a reverse merger between the two firms. (Ex. 21) Aduro was started in Berkeley in 2015, and operated, and was headquartered in Berkeley, CA until, around the time of its reverse merger in 2020. (Ex. 22) As a result of the merger it relocated most of its operations outside of Berkeley.
However, this does not excuse the failure to report Chinook Pharmaceuticals for the 2021 through 2023 reporting years as Chinook continued to operate in Berkeley. It retained (and then sublet) the long-term lease with Wareham Development for Aduro’s headquarters at 740 Heinz St. (Ex. 23) as well as acquiring various Aduro patent rights held in conjunction with the University of California, Berkeley. (Ex. 24)
Chinook’s continued long-term lease in Berkeley should have been known by Ms. Hahn, as it was included in Chinook’s 2023 Annual Report, attested to by her husband in his role as CFO of Chinook (Ex. 23). Additionally, even if Chinook had completely eliminated its Berkeley presence (which it did not), the FPPC requires that candidates continue reporting for the following two years after departure (i.e. 2021 and 2022). Once again, this is something that Ms. Hahn failed to do.
CONCLUSION
It is the obligation of California’s public officials, and not the public itself, to report and identify an official’s financial interests so that the public can be aware of potential conflicts. As a result, the information presented above may need to modified to better reflect actual numbers, be converted as necessary from fiscal to calendar years as appropriate, and may omit other income and investments that need to be reported. This is the obligation of Ms. Hahn. Nonetheless, as shown above, Ms. Hahn has not fully and accurately made these financial interests available, either through a lack of knowledge or other reason.
