Republican presidential candidate, former Massachusetts Gov. Mitt Romney, earphones in, laptop and mobile phone in hand sits by Lake Winnipesaukee at his home Saturday, July 14, 2012, in Wolfeboro, N.H.

Evan Vucci, Associated Press - Ap

Fact check: Do SEC filings suggest criminal activity?

  • July 14, 2012 - 7:41 PM



The claim: "Romney and Bain claim that he was not involved with Bain, but Bain and its portfolio companies in their required filings under the Securities Exchange Act continuously certified to the Securities and Exchange Commission say precisely the opposite -- asserting without qualification that he was a controlling person, fully in charge of Bain, under the Federal securities law. Under normal circumstances, the question of the truth of this representation would result in an investigation by the SEC into possible criminal, as well as civil, violations of the law." Robert Bauer, President Obama's campaign counsel, July 13, 2012


There is a journalistic convention that appears to place great weight on "SEC documents." But these are public filings by companies, which usually means there are not great secrets hidden in them.

The Fact Checker stands by our assessment that Mitt Romney left the helm of Bain Capital in 1999, when he left to run the Salt Lake City Olympics. The date is important because some questionable investments by Bain took place between 1999 and 2002, when he ran for governor. But a Boston Globe article on Thursday raised new questions about that timeline, citing SEC filings, and the Obama campaign jumped to take advantage of it.

Despite the furor, there was not much new in the Globe article. Much of the language in the SEC documents related to Romney and Bain -- that Romney was "sole stockholder, chairman of the board, chief executive officer, and president" -- was boilerplate that did not reveal whether he was actually managing Bain at the time.

The one thing new in the Globe story was the assertion that "Romney's state financial disclosure forms indicate he earned at least $100,000 as a Bain 'executive' in 2001 and 2002, separate from investment earnings." The 2001 form describes him as a "former executive" -- the campaign says this was retirement pay -- but the 2002 form says "executive." So either you believe he suddenly rejoined the firm, after leaving it, or someone made a typo.

Romney's sudden departure from Bain had left the partnership in flux, in fact almost breaking up the firm, and a final resolution was not reached until he ended his Olympic sojourn and decided to run for governor. At that point, he signed retirement papers that set his departure date as February 1999, the month he left for the Olympics.

Fortune magazine on Thursday reported that it had obtained the offering documents for Bain Capital funds circulating in 2000 and 2001. None of the documents show that Romney was listed as being among the "key investment professionals" who would manage the money.

Let's also not forget that Massachusetts Democrats tried to keep Romney off the ballot in the 2002 governor's race on the grounds that he had been living and working in Utah, even paying taxes there, and thus had failed to meet the requirement to have lived seven consecutive years in Massachusetts.

Still, the Obama campaign has raised a very serious charge of potential criminal behavior. Does it have much credibility?

The SEC can bring civil charges for discrepancies in filing 13D documents, but as far as we can tell none has ever been brought for someone listing a misleading title. Moreover, there is a five-year statue of limitations, though the clock could start from when the SEC becomes aware of the matter. But 12 years have passed since the filing in question.

There is grey area about Romney's involvement with Bain in the 1999-2002 period, because his future post-Olympics role had not been settled and the future of Bain Capital was in flux. Some have seized on the SEC documents as evidence, but we think there are two stronger pieces of evidence that trump these random filings. But the weight of evidence suggests that Romney did in fact end active management of Bain in 1999. He stated that in a federal disclosure form he signed, under threat of criminal penalties. He said he was a "former employee" in a state disclosure form. A state commission concluded 10 years ago that he did, indeed, leave Bain in 1999. And investors were told he was not part of the management team.


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