By Dan Primack
December 20, 2011

Why Romney’s ongoing interests in Bain Capital could matter.

The NY Times this morning is getting lots of buzz today for reporting that Mitt Romney still has significant financial interests in Bain Capital, via his retirement agreement. I kind of thought everyone already knew that based on financial disclosure forms from the last presidential campaign, which is why I had only mentioned it in passing on our Romney fact/fiction blog.

To be clear, there is nothing  or untoward about such an arrangement. One reason why big private equity firms like The Blackstone Group (BX) have gone public is to help monetize founder equity. Bain has always wanted to remain privately-held, so this sort of arrangement is a workaround.

Moreover, there is no evidence that Romney currently has any operational input into Bain Capital investment decisions or other operational affairs.

What could become problematic, however, would be a President Romney who also is a limited partner in all current Bain funds. I know these positions all get wrapped up into a “blind trust,” but Romney obviously will know when Bain wants to buy a major company that could receive regulatory scrutiny.

For example, what if that rumored Bain/Yahoo transaction were to occur, and still be under government review after Romney is sworn in. Or what if current Bain Capital portfolio company Clear Channel runs into some sort of conflict, or needs an approval, from the Federal Communications Commission? Or remember 2008, when Bain tried to team with China’s Huawei Technologies to buy 3Com, but it was abandoned after objections from the Committee on Foreign Investment? Would things have been different were that deal to have been struck in 2012? Should we even be in a position where such questions get raised?

I don’t think a President Romney would be legally required to give up the Bain positions – Dick Cheney, for example, held onto Halliburton stock options (while promising to donate the profits to charity) – but anything less would needlessly raise all sorts of conflicts of interest.

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