Matt Bevin, campaigning for Kentucky’s Senate seat in the Republican primary, said his signature on a document expressing support for the 2008 Wall Street bailouts was just a formality. But legal experts — including Bevin’s own lawyer — are dismissing the excuse.
“As a general matter if you put your signature on anything you would be at least acknowledging you don’t have a major issue with the content,” Wade R. Bridge, the attorney listed on Bevin’s 2008 filing, told Breitbart News.
At issue is an Oct. 2008 report to shareholders of Veracity Small Cap Value Fund, a mutual fund of which Bevin was president at the time, which said the Troubled Asset Relief Program was a “positive development” for the economy and said “don’t call it a bailout.”
In an interview with Glenn Beck on Tuesday, Bevin asserted that his signature on the letter did not mean he agreed with its contents. Bevin also asserted that he was required by law to sign the report to shareholders letter. Bevin told Beck “I didn’t actually write that letter. My position [on TARP] has always been the same.” Later in the interview, Bevin added “I was as president and chairman of the board required by law to verify the veracity of the financial figures, the assets under management, the number of outstanding shares, et cetera.”
Bevin also told Beck “I was not approving of anyone else’s opinions,” by signing the report to shareholders letter. Bevin added that “I did not write any of the letters that were ever published as investment commentary.”
Bevin campaign spokesperson Rachel Semmell told Breitbart News on Thursday “Matt’s signatures were a formality that were not intended to be an endorsement of the opinions of others.”
Bridge told Breitbart News that Bevin’s signature on the report to shareholders letter indicates that “The letter is supposed to be a discussion of performance and things that have impacted performance.”
Cornell Law School Professor Charles Whitehead, a nationally recognized expert on securities law, also called the explanation “odd.”
“It may be true that he signed as a CEO but it would be an odd thing for a CEO to disagree with a letter that he signed and sent to the company’s shareholders or a filing that was made with the SEC,” Whitehead told Breitbart News.
University of Iowa Law School professor and securities expert Robert T. Miller told the Weekly Standard “[t]he general standard for the whole truth-telling required in the federal securities laws is that you may not make a material misstatement of fact and you may not omit a fact.”
Miller added “[t]he question of whether TARP was a good thing or a bad thing would be treated as an issue of opinion, not a technical fact. But the truth-telling standard still applies.””
Breitbart News interviewed several sources familiar with the SEC reporting requirements for registered management investment companies for their opinions on Bevin’s defense. Several sources told Breitbart News that the SEC would consider that the signators of the cover letter are attesting to its contents. The letter, they said, as signed by Bevin and Bandi is part of the N-CSR report, and the report is a certification to the SEC made by the officers of the company. Therefore both Bevin and Bandi were attesting to the letter’s contents.
Politico originally reported on the report to shareholders which was written by Daniel Bandi, vice president and chief investment officer. The document said:
Most of the positive developments [in the market this quarter] have been government led, such as the effective nationalization of Fannie Mae and Freddie Mac, the passage of the $700 billion TARP (don’t call it a bailout) and the Federal Reserve’s intention to invest in commercial paper. These moves should help to stabilize asset prices and help to ease liquidity constraints in the financial system. We have yet to see significant improvement in lending spreads (for the most part the opposite is true), but are hopeful that the groundwork has been laid.
The document was a several page “report to shareholders” letter dated October 28, 2008 that was included as “item 1” of an N-CSR filing made to the Securities and Exchange Commission by Veracity Small Cap Value Fund, a registered management investment company which Bevin then served as president, in November 2008. Bevin signed “item 1,” the report to shareholders letter, along with chief investment officer Daniel Bandi. He also signed the complete N-CSR filing of Veracity Small Cap Value Fund attesting to the accuracy of the contents of the entire document on November 4, 2008, along with the company’s treasurer, Mark Seger.
Bevin has incorrectly referred to the letter as an “investment commentary,” and the document as a “prospectus,” which it is not. A prospectus is a legal document designed to present the case to potential investors who are considering an investment in a company. The document in question is an N-CSR report filed with the Securities and Exchange Commission. An N-CSR report is a “Report of an Registered Management Investment Company” to describe the company’s results during a specific period of time that is required by law to be filed with the Securities and Exchange Commission.
Conservative activists have stood by Bevin despite the controversy.
On Thursday, the United Kentucky Tea Party issued a press release condemning Politico for the article. Spokesman Scott Hoffstra said “After reading the Politico article, speaking with Matt Bevin and researching the facts, we are firmly convinced that the article has absolutely no merit and that this was a deliberate and unfounded smear attack by Politico.”
Hoffstra added that “The United Kentucky Tea Party continues to stand behind Matt Bevin and support him whole heartedly. The article by Politico shows that those on the left are concerned about Matt Bevin’s candidacy and will resort to maliciously smearing him in order to try to stop him.”
You can hear Glenn Beck’s Tuesday interview with Matt Bevin here:
You can read the entire N-CSR document signed by Matt Bevin and filed with the Securities and Exchange Commission in November 2008 here:
The controversy surrounding the release of the 2008 document, and Bevin’s less than forthcoming explanation has done little to dampen enthusiasm for his candidacy among the Tea Party and Liberty groups across the state of Kentucky who have endorsed him over McConnell. On Thursday, the United Kentucky Tea Party issued a press release “condemning Politico” for the article. Spokesperson Scott Hoffstra said “After reading the Politico article, speaking with Matt Bevin and researching the facts, we are firmly convinced that the article has absolutely no merit and that this was a deliberate and unfounded smear attack by Politico.”
Hoffstra added that “The United Kentucky Tea Party continues to stand behind Matt Bevin and support him whole heartedly. The article by Politico shows that those on the left are concerned about Matt Bevin’s candidacy and will resort to maliciously smearing him in order to try to stop him.”
Hoffstra also stated that “We support Matt Bevin’s statement ‘I did not write any of the letters that were ever published as investment commentary,’ he continued. ‘I was the president and chairman of the board and by SEC law, was required to sign prospectuses when they were sent out.’ “
On Thursday afternoon, Hoffstra responded to the Breitbart News report that Bevin had inaccurately described the 2008 document he signed that contains the “pro-TARP” statement.
Hoffstra added that “it’s clear McConnell is digging for dirt because he is trying to cover up his effort to raise the debt ceiling yesterday without any spending cuts. This behavior is unbecoming, but unfortunately, not surprising from our 30 year senator.”
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