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article imageBain Capital document says Romney was 'managing member' in 2002

By JohnThomas Didymus     Jul 15, 2012 in Politics
New evidence has emerged that Romney did not end his active role with Bain Capital in February 1999 as he has insisted in order to absolve himself of responsibility for outsourcing of jobs and bankruptcies after that date.
The Huffington Post reports that a corporate document filed with the state of Massachusetts, a month after Romney was elected governor in December 2002, lists him as one of the two managing members of Bain Capital Investors, LLC. According to the document, the managing members of Bain Capital were authorized to "execute, acknowledge, deliver and record any recordable instrument purporting to affect an interest in real property, whether to be recorded with a Registry of Deeds or with a District Office of the Land Court."
A report by The Boston Globe gives further details, stating that the Massachusetts financial disclosure indicated that he still owned 100 percent of Bain Capital in 2002, and that his state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, apart from his investment earnings.
But in 2011, Romney in a financial disclosure, told federal authorities that he "retired from Bain Capital on February 11, 1999 to head the Salt Lake Organizing Committee [for the 2002 Winter Olympics]." Acccordingn to Romney, "Since February 11, 1999, [he] has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way."
Digital Journal reported that the Boston Globe first raised questions about the exact time Romney disengaged from Bain. A Boston Globe report alleged that SEC filings show that contrary to Romney's claim, he continued to manage the company after 1999.
Digital Journal reported that Romney had reacted to previous evidence that he was in charge of Bain from 1999 to 2001 (the document listing Romney as being in charge of Bain until 2001 may be viewed here), saying he was at the head of the company but did not manage it as it transitioned to new ownership at the time. According to The Huffington Post, Romney, during this period, took a six-figure salary, signed corporate documents related to both major and minor deals and attended board meetings related to at least two companies affiliated with Bain.
Evidence keeps piling up that in spite of Romney's insistence that "Since February 11, 1999, [he] has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way," he has been involved in the managing Bain Capital Investors, LLC, a Bain Capital entity.
According to The Huffington, with the evidence now available, Romney has only two possible explanations he can offer: "Either Romney was officially in charge of the company but took no actual responsibility for it, or he was involved then and is either lying or shading the truth now."
Either explanations may have political and legal consequences for Romney.
The Atlantic Wire reports that Romney's campaign has responded to the latest evidence that extends his tenure with Bain to 2002, saying Romney's name was still on the paperwork for legal technicalities. The Boston Globe, however, reports that a former SEC commissioner Roberta S. Karmel, said the claim "strains credulity":
"You can’t say statements filed with the SEC are meaningless. This is a fact in an SEC filing… It doesn’t make a whole lot of sense to say he was technically in charge on paper but he had nothing to do with Bain’s operations. Was he getting paid? He’s the sole stockholder. Are you telling me he owned the company but had no say in its investments?"
According to The Boston Globe, if Romney actually did leave in 1999, but continued to listed as controlling the firm, that could have legal implications too. Karmel said:
"If someone invested with Bain Capital because they believed Mitt Romney was a great fund manager, and it turns out he wasn’t really doing anything, that could be considered a misrepresentation to the investor... It’s a theory that could be used in a lawsuit against him."
Forbes points out that the legal question in Romney's case is whether Bain SEC filings contained “any misstatement or omission of a material fact, or one that investors would think was important to their decision to buy or sell the stock,” according to the Rule 10-b5 of the Securities Exchange Act of 1934.
Forbes reports that a retired SEC commissioner said that a more relevant law in Romney's case might be the Advisers Act, whose " rules are directed to the protection of advisory clients.” Forbes notes, however, that it is unclear whether Bain Capital limited partner investors would be considered advisory clients ("an investor who receives advice from his stockbroker and who gives his consent before the broker takes any action on his behalf").
Forbes concludes that if in 2001, an investor read Bain Capital’s SEC filing that stated Romney was its CEO and sole owner receiving more than $100,000 in compensation, the investor would reasonably conclude that Romney was in charge of the company.
If, however, the investor received information that Romney was not in charge, he might begin wondering what to make of a company that pays a six-figure salary to an executive who spends his time doing a different job!
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