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Romney's 'responsibility' for Bain Capital

July 16, 2012: 2:07 PM ET

Confusion reigns over when Romney really left Bain Capital, and both sides are to blame.

FORTUNE -- Last Thursday, I wrote about how Bain Capital had not listed Mitt Romney as a manager on placement memoranda for three funds that it raised in 2000 and 2001 – the disputed time period after Romney says he left Bain to run the Olympics, but before he actually stepped down as CEO and sold the firm. To me, it was further confirmation that Romney was telling the truth about when he stopped making decisions at Bain, and that the Obama campaign was making mountains out of a fictional molehill.

Four follow-up items:

1. In my original post, I steered clear of using the word "responsibility." My aim was only to show that neither Bain Capital nor its investors believed that Mitt Romney was still making investment decisions by the summer of 2000, not whether or not he would have been legally liable had the firm been sued either during that period, or subsequently for acts that occurred during that period. From my perspective, the pertinent political question is whether voters should consider Bain's actions from 2000-2002 in their analysis of Romney.

That said, the Romney campaign is shooting itself in the foot by refusing to acknowledge that Romney did indeed have legal responsibility for Bain Capital so long as he was sole shareholder and CEO (even if he, perhaps, didn't have legal responsibility for all actions of the underlying funds – a GP vs. LLC issue that a court is currently considering in the Ellen Pao vs. Kleiner Perkins case). What are the worried about? Retroactive lawsuits?

Look, if a friend jumps off my roof and breaks his neck, chances are I'm legally liable – but no one would accuse me of making the decision to jump. Voters are smart enough to understand the distinction, if only the Romney folks would be willing to make it.

Instead, a source close to the campaign simply sent over info on a lawsuit related to the bankruptcy of KB Toys – a deal originally done in December 2000 – and noted that Romney was not named as a defendant. All that means is that one set of plaintiffs attorneys decided to look elsewhere for compensation, not that they couldn't also have named Romney had they so chosen.

Until Romney gets a better grasp of his own historical narrative, Obama is going to hammer him with it.

2. Yes, I still need to find documentation on what Bain told investors of older funds that were still active when Romney left for Salt Lake City. For example, was he removed from the investment committee of the still-active Bain Capital VI? Did he remain a keyman?

3. Many commenters asked why I didn't post the actual PPM documents, with some asserting that I was making them up to carry water for the Romney campaign (regular readers, feel free to chuckle). The answer is fairly simple, if not satisfactory: I basically had to negotiate for them, and the final arrangement was that I could use the information – and quote from it – but that I could not actually publish theconfidential  docs. And, to be as transparent as possible, I received the PPM info from two separate, unrelated sources – but made the same deal with both.

4. One thing a lot of people seem to be missing here is that being CEO of a private equity firm is not the same of being CEO of most any other type of business. In fact, most PE firms don't even have CEOs -- including the current incarnation of Bain Capital.

Instead, most private equity "firms" are legal constructs, designed to serve as an umbrella for several underlying investment funds that get raised over time. Think of it like the administrative back office -- responsible for paying the office lease and salaries, but not actually being involved in the firm's primary business (i.e., making and managing investments). It may sound absurd, but someone can be CEO of a private equity firm without being personally involved in its investments. Highly unusual -- the few private equity CEOs out there do typically double as investors -- but not impossible.

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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