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Mitt Romney, liar.

JoeTheJuggler said:
Again, you really want to know what is improper (or deceitful) about a statement to the SEC that says, "Mr. W. Mitt Romney is the sole shareholder, sole director, Chief Executive
Officer and President of Bain Capital and thus is the controlling person of Bain Capital" if we also assume that Romney was not in fact the person controlling the company?
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Well, yes. What are the SEC requirements for making that statements?

Again, you really don't know, do you?
 
Ziggurat said:
Well, yes. What are the SEC requirements for making that statements?
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According to 17 C.F.R. § 240.12b-2,

The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
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According to 17 CFR 240.12b-22,

If the existence of control is open to reasonable doubt in any instance, the registrant may disclaim the existence of control and any admission thereof; in such case, however, the registrant shall state the material facts pertinent to the possible existence of control.
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According to 15 U.S.C. § 77(o),

Every person who, by or through stock ownership, agency, or otherwise, or who, pursuant to or in connection with an agreement or understanding with one or more other persons by or through stock ownership, agency, or otherwise, controls any person liable under sections 77k or 77l of this title, shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person had no knowledge of or reasonable ground to believe in the existence of the facts by reason of which the liability of the controlled person is alleged to exist.
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15 U.S.C. § 77(k) covers civil liabilities for making a false registration statement, and 15 U.S.C. § 77(l) covers civil liabilities for false information in a prospectus or other communication made to people purchasing securities from the registered company.

According to 15 U.S.C. § 77(b),

The term “person” means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. As used in this paragraph the term “trust” shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.
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According to the filing made with the SEC, Mitt Romney was listed as "the sole shareholder, sole director, Chief Executive Officer and President of Bain Capital and thus is the controlling person of Bain Capital", with no disclaimer of control, thus making him, per the regulations cited above, liable for everything Bain did, at least as far as the SEC was concerned.

EDIT: Here is the specific regulation governing the form filed (Schedule 13D). It says:

Disclosure of the information specified in this schedule is mandatory. The information will be used for the primary purpose of determining and disclosing the holdings of certain beneficial owners of certain equity securities. This statement will be made a matter of public record. Therefore, any information given will be available for inspection by any member of the public.

Because of the public nature of the information, the Commission can use it for a variety of purposes, including referral to other governmental authorities or securities self-regulatory organizations for investigatory purposes or in connection with litigation involving the federal securities laws or other civil, criminal or regulatory statutes or provisions.

Failure to disclose the information requested by this schedule may result in civil or criminal action against the persons involved for violation of the federal securities laws and rules promulgated thereunder.

[...]


C. If the statement is filed by a general or limited partnership, syndicate, or other group, the information called for by Items 2-6, inclusive, shall be given with respect to

i. each partner of such general partnership;

ii. each partner who is denominated as a general partner or who functions as a general partner of such limited partnership;

iii. each member of such syndicate or group; and

iiv. each person controlling such partner or member. If the statement is filed by a corporation or if a person referred to in (i),(ii), (iii) or (iv) of this Instruction is a corporation, the information called for by the above mentioned items shall be given with respect to

a. each executive officer and director of such corporation;

b. each person controlling such corporation; and

c. each executive officer and director of any corporation or other person ultimately in control of such corporation.

[...]

Item 2. Identity and Background

If the person filing this statement or any person enumerated in Instruction C of this statement is a corporation, general partnership, limited partnership, syndicate or other group of persons, state its name, the state or other place of its organization, its principal business, the address of its principal office and the information required by (d) and (e) of this Item. If the person filing this statement or any person enumerated in Instruction C is a natural person, provide the information specified in (a) through (f) of this Item with respect to such person(s).

a. Name;

b. Residence or business address;

c. Present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted;

d. Whether or not, during the last five years, such person has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, give the dates, nature of conviction, name and location of court, any penalty imposed, or other disposition of the case;

e. Whether or not, during the last five years, such person was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws; and, if so, identify and describe such proceedings and summarize the terms of such judgment, decree or final order; and

f. Citizenship.
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The Item 2 information in the filing for the sole controlling persons of the corporations and partnerships is Mr. W. Mitt Romney.
 
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Here's Bain's statement on the matter:

Due to the sudden nature of Mr. Romney’s departure, he remained the sole stockholder for a time while formal ownership was being documented and transferred to the group of partners who took over management of the firm in 1999. Accordingly, Mr. Romney was reported in various capacities on SEC filings during this period.
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That sounds plausible to me, especially since several Bain executives who have reiterated this are outspoken Obama supporters. It seems to me that "no role" can reasonably be taken to mean that he had no input in day to day operations, at least when the claim is made in response to criticism of decisions made in the course Bain's day to day operations. I have seen no evidence that this was not the case. Basically it was an indefinite leave of absence from which he didn't return, and which either wasn't formalized until 3 years later, or else took several years to finish formalizing (which would not be particularly unusual, and is in fact allowed and even anticipated under the corporate laws of most, if not all, states).

Note this from Fortune:

[Bain] eventually would discard the CEO position in favor of a horizontal management committee made of of numerous partners, and provide Romney with a golden parachute that included limited partnership interests in all Bain-related funds raised through 2009 (including the option for Romney to invest additional monies). But none of that was in place when Romney took the Salt Lake City job ... Moreover, unwinding a private equity firm's ownership structure is extremely complicated. The 'firm' itself is largely a legal construct of convenience, since it doesn't pay salaries, make investments or do much of anything else. Instead, what matters are the individual funds.
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Bolding mine. A limited partner, by definition, has no role in managing day to day operations of the entity. Otherwise he would forfeit limited liability. It appears there was a period of time during which Romney had not yet officially been made a limited (passive) partner, but during which time he was not involved with the daily operations of Bain, despite being its titular CEO and sole director (he was working 80-100 hours per week on the Olympics, so I don't see how he could have been involved in Bain's operations). During that time, he legally could have taken back control. But he never did. This is a big nothing-burger, and given the "three pinocchio" rating from that right wing rag known as the Washington Post, it isn't going to hurt Romney at all among people smart enough to use Google.
 
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BenBurch said:
The President is a lawyer.

Many of his campaign staff are lawyers.

They know what the law says, and know how to find out if they don't pretty much by definition.
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I wouldn't assume that. Well, I'm sure they know how to look up what the law is (no law degree required for that), but all lawyers are ignorant of much of "what the law says." There is simply too much to know. That's why lawyers specialize.

Of course, no one who knew the relevant law would have suggested the false dichotomy that has been advanced by the campaign ("either he lied to the SEC or he lied to the public"), unless they just didn't care whether they were accurately representing that law.
 
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ANTPogo said:
According to 17 C.F.R. § 240.12b-2
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So that definition is about who has the ultimate power in the company. It says nothing about who actually makes the decisions. If Romney had the legal authority to make decisions but completely delegated all of those decisions to others without any active involvement, then I don't see that a conflict exists between the SEC filing and the public statement that he wasn't involved.

According to the filing made with the SEC, Mitt Romney was listed as "the sole shareholder, sole director, Chief Executive Officer and President of Bain Capital and thus is the controlling person of Bain Capital", with no disclaimer of control, thus making him, per the regulations cited above, liable for everything Bain did, at least as far as the SEC was concerned.
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Well, that's rather the key point, isn't it? What is the SEC concerned about? They're concerned about certain laws and regulations. There is no indication that those laws or regulations were violated, so there's nothing for the SEC to hold him liable for. What the public considers him "liable" for is different, and so should naturally depend on different criteria.
 
Freddy said:
...but all lawyers are ignorant of much of "what the law says." There is simply too much to know. That's why lawyers specialize.
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That's why I rely on JREF for sound legal advice. There is always some Einstein here telling me with confidence what the law is and what it means (yes, I include me in that mix from time to time).
 
Ziggurat said:
So that definition is about who has the ultimate power in the company. It says nothing about who actually makes the decisions. If Romney had the legal authority to make decisions but completely delegated all of those decisions to others without any active involvement, then I don't see that a conflict exists between the SEC filing and the public statement that he wasn't involved.
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If a controller had "the power to direct or cause the direction of the management and policies of a person", and Romney was the sole person with that power at the company, then even if he delegated, he's still responsible for the people making decisions in his name.

Delegation of tasks does not mean abrogation of responsibility.

They're concerned about certain laws and regulations. There is no indication that those laws or regulations were violated, so there's nothing for the SEC to hold him liable for. What the public considers him "liable" for is different, and so should naturally depend on different criteria.
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If he's legally required to list everyone with control of the company on Schedule 13D, and he lists only himself, then if someone else also has controlling power, he's violating the part of the regulation that says he's supposed to list everyone. If someone else didn't have controlling power, then he's legally and ethically responsible for anything the company (or his subordinates at the company) does.

If, for example, he delegated the writing of a prospectus to some corporate lackey, and said lackey totally and blatantly lied on that prospectus and the company gets investigated and sued as a result, Romney saying "Hey, I delegated that responsibility to her to spend time at my mansion in the mountains, and had no idea what she was doing!" wouldn't help him one bit.
 
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ANTPogo said:
If a controller had "the power to direct or cause the direction of the management and policies of a person", and Romney was the sole person with that power at the company, then even if he delegated, he's still responsible for the people making decisions in his name.
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In terms of what the SEC cares about, yes. That name on that piece of paper places a legal obligation on Romney to make sure the company obeys the relevant laws and regulations. But no illegal activity took place, so there's no problem on that front. In terms of my personal evaluation of what he's responsible for, his name on that sheet of paper has no significance beyond what the SEC cares about, and I haven't been given any reason why it should.

If, for example, he delegated the writing of a prospectus to some corporate lackey, and said lackey totally and blatantly lied on that prospectus and the company gets investigated and sued as a result, Romney saying "Hey, I delegated that responsibility to her to spend time at my mansion in the mountains, and had no idea what she was doing!" wouldn't help him one bit.
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Quite so. But then, nothing like that happened.
 
Freddy said:
Here's Bain's statement on the matter:

That sounds plausible to me, especially since several Bain executives who have reiterated this are outspoken Obama supporters. It seems to me that "no role" can reasonably be taken to mean that he had no input in day to day operations, at least when the claim is made in response to criticism of decisions made in the course Bain's day to day operations. I have seen no evidence that this was not the case. Basically it was an indefinite leave of absence from which he didn't return, and which either wasn't formalized until 3 years later, or else took several years to finish formalizing (which would not be particularly unusual, and is in fact allowed and even anticipated under the corporate laws of most, if not all, states).
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I highly doubt that it takes 3 years to name an interim CEO and an interim president. Especially when all the stock in the company is owned by a single person. I'm guessing that this can be done at a single board meeting.

There is a HUGE difference between transferring a position from one person to another and transferring ownership of a company from one person to another. I wouldn't be in this thread if Romney had merely been listed as the sole stockholder, or even as the chairman of the board. Can someone come up with a legal reason why Romney could not transfer the CEO and president positions to an interim or show that Romney's agreement with Bain specifically stated that he would have no authority or capacity to discuss any business matter with any member of Bain? Are there minutes from a board meeting when these issues were discussed? As far as I'm concerned, the question is whether or not Romney had any authority or capacity to consult for Bain, not whether, or how much, he exercised either of those privileges.
 
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TellyKNeasuss said:
As far as I'm concerned, the question is whether or not Romney had any authority or capacity to consult for Bain, not whether, or how much, he exercised either of those privileges.
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Why is that the relevant standard for you?
 
Ziggurat said:
Why is that the relevant standard for you?
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Because it means that he really didn't leave Bain in 1999. Because it means that he could have altered events and by not doing so he shares responsibility for those events. If a football coach decides to let the quarterback call the plays, does that mean that the coach has no responsibility if the team loses because of poor play-calling?
 
TellyKNeasuss said:
Because it means that he really didn't leave Bain in 1999. Because it means that he could have altered events and by not doing so he shares responsibility for those events. If a football coach decides to let the quarterback call the plays, does that mean that the coach has no responsibility if the team loses because of poor play-calling?
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I think that depends on whether or not it was a good decision, given what was known a priori (not a postiori), about the QB's suitability to make the calls. If the coach should have known the QB wasn't up to it, sure. If the QB was up to it, but things just didn't work out, then no, I don't think he is to blame.

Is there any reason to think the people Romney left making the decisions weren't up to the task? I haven't seen anyone make that argument.
 
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