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Romney’s Bain Pain: Breaking Down the SEC Laws
Mitt Romney is set to do a bunch of interviews tonight at 6PM to beat back the growing Bain Pain about his inaccurate SEC filings or just when he left Bain, and how he could be President and sole stockholder but not be responsible for the outsourcing.
It’s a Friday news dump, so maybe he’s going to come clean, but it’s so unlike Romney to be definitive about anything. He was careful in his choices, picking the conservative on CBS, CNN, Fox News, you know the drill. He’s doing brief interviews – a few moments. Not a big sit down. But still, it’s another big Good On Mitt, he finally talked to some folks, even if the interviews are being pre-taped as opposed to those risky live interviews like a press conference or a live interview.
You can expect a lot of “I was there but not there, this here is how business works, etc” but mostly, if I know Mitt Romney, we’re going to be hearing about how mean Obama is and what a liar Obama is for letting his staff suggest that Mitt Romney is either a criminal or a liar.
The Obama campaign hit back hard on the surfacing SEC filings today:
Deputy campaign manager Stephanie Cutter laid out the issue as the Obama team sees it: “Either Mitt Romney, through his own words and his own signature, was misrepresenting his position at Bain to the SEC, which is a felony. Or he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments” including layoffs and the outsourcing of jobs.
This all picked up a lot of steam yesterday when Mitt Romney released a $675,000 ad campaign calling Obama a liar, based on Obama’s calling Romney an outsourcer — which was proven true within hours of Romney releasing the ad by an article in the Boston Globe detailing SEC filings that showed that Romney/Bain said he was in charge.
Insults like “liar” are apparently acceptable when coming from a Republican, but unacceptable when coming from a Democratic staff member who is simply repeating what FactCheck.org said about Romney’s position – that he couldn’t have been at Bain after 1999 or else he would be guilty of a federal felony.
Yet several different Bain related companies show him on the board, he was the President, CEO and sole shareholder of Bain until 2003, and then there are his own disclosures, which say he was there to the state but say he wasn’t there to the feds.
You can understand why Mitt is confused and angry and would rather blame Obama for busting him than admit he should have just owned up to the job outsourcing and none of this would have come up. It seems as if Romney’s team isn’t prepared for a national election.
Here’s the Romney camp’s reply today:
President Obama’s campaign hit a new low today when one of its senior advisers made a reckless and unsubstantiated charge to reporters about Mitt Romney that was so over the top that it calls into question the integrity of their entire campaign. President Obama ought to apologize for the out-of-control behavior of his staff, which demeans the office he holds. Campaigns are supposed to be hard fought, but statements like those made by Stephanie Cutter belittle the process and the candidate on whose behalf she works.
This is pretty weak from the Romney camp. There isn’t an outright denial in this statement. They call the Obama campaign’s response “reckless and unsubstantiated” but they don’t say it’s untrue. They are trying to paint Obama as reckless — that’s not a great plan. President Obama is famous for his cool, measured style. If Obama came out this hard, he’s going somewhere with it.
Obama campaign counsel Bob Bauer hinted that there is more to come. Romney should know by now that President Obama doesn’t make accusations he can’t prove. The man is a Constitutional lawyer who already ran a successful Presidential campaign in 2008, and never did he accuse John McCain of something like this. In fact, making accusations isn’t Obama’s style.
To that end, let’s break down the SEC laws, so everyone can understand them before Mitt graces us with his Why It’s Obama’s Fault interviews. Legal experts in corporate law broke this down for us:
The majority of securities fraud cases in the United States involve Section 10b and Rule 10b-5 of the 1934 Securities Exchange Act. Section 10b is a general provision that prohibits any person from using fraud in connection with the purchase or sale of any security. Rule 10b-5 specifically prohibits making any false statements or omissions in connection with the sale or purchase of securities. A “false statement” is defined as any statement that misleads or creates a false impression. To be actionable under Rule 10b-5, the false statement or omission must be material.
A statement is material if it would be important to a reasonable investor making an investment decision.
Additionally, the statement or omission must be made with the intent to deceive, manipulate or defraud. Thus, ‘reasonable mistakes of fact’, made without a malicious intent, are not actionable under Rule 10b-5.
Misrepresentation of financial information by corporations is classified as accounting fraud. As a result of several major accounting scandals, the government enacted the Sarbanes-Oxley Act of 2002, which imposes a number of securities law reforms aimed at increasing financial disclosures – such as who is your “chairman of the board, chief executive officer, and president” — and discouraging corporate fraud.
Bottom line, there are only two possibilities: Bain misled the SEC (felony) or Romney has been misleading the public.
So there you have it. It’s either fraud or a lie. We’ll see how Romney puts lipstick on this pig tonight.
For additional reading on Security Laws, click here and download the Security Law Primer.