Mitt Romney, the presumptive Republican presidential nominee who became a millionaire running Bain Capital LLC, invested in funds run by his former firm that used investing and tax strategies beyond the reach of ordinary savers, a source of wealth underscored by documents released yesterday by the website Gawker.
More than 950 pages of confidential financial reports and investor correspondence, which Gawker obtained from a source it didn't name, provide an investment-by-investment look at many deals that Boston-based Bain pursued for its clients, who include wealthy individuals and institutions such as public pensions and endowments. Romney, who co-founded Bain in 1984, was able to put money into the funds after he left in 1999 to oversee the Salt Lake City Olympics and later serve as governor of Massachusetts.
Bain, which manages $65 billion in assets, is known as a leveraged-buyout or private-equity firm, acquiring companies such as Toys R Us Inc. and Dunkin' Brands Group Inc. with a combination of investor cash and debt. Like other LBO firms, Bain's goal is to run the companies for three to five years and sell at a profit. It also has funds that invest in corporate debt, as well as collateralized-debt obligations and credit- default swaps, types of fixed-income securities whose decline in value contributed to the 2008 financial crisis.
"For wealthy individuals, this is not unusual," said Steven Kaplan, a professor at the University of Chicago Booth School of Business.
LBO Scrutiny
Romney's campaign has drawn scrutiny to the LBO business because firms sometimes cut workers to increase earnings and make companies more attractive to buyers. Opponents also have zeroed in on the tax treatment of buyout profits, which are treated as capital gains rather than ordinary income, qualifying for a lower rate.
Romney has countered the criticism in part by saying his business experience qualifies him to address problems in the U.S. economy, including unemployment. Andrea Saul, a Romney campaign spokeswoman, referred questions about the documents to Bain.
rest at http://www.bloomberg.com/news/2012-08-24/romney-s-bain-funds-showcase-deals-for-wealthy-only.html
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