Much of Mitt Romney’s millions has come from his relationship with the biggest name on Wall Street: Goldman Sachs.
In the personal tax returns released by Romney’s presidential campaign Monday, Goldman is revealed as one of the central players involved in managing his family’s massive wealth.
A significant proportion of the Romney family fortune is parked with an elite division of Goldman that is open only to clients with more than $10 million to invest. Another chunk of the fortune is invested in Goldman-run hedge funds, which like all hedge funds are open only to millionaires.
One of the most profitable single investments visible in Romney’s recent tax returns came from the sale of shares in Goldman itself. He was among a select group of investors allowed to buy Goldman shares on the day the bank went public in 1999. By the time 7,000 of the shares were sold by Romney’s estate in 2010, they netted a $759,000 profit.
“You have to be a favored person to get that kind of thing,” said Charles Geisst, a former banker and professor of finance at Manhattan College.
Goldman has a long history of quietly catering to America’s elite. Since the financial crisis, though, the firm has come under public scrutiny for its massive profits and close ties to the country’s political leadership.
Romney’s fortune is now handled through a blind trust managed by a Boston attorney, who is responsible for choosing the specific investments. But Romney’s ties to Goldman began before these trusts were set up and underscore his membership in the country’s most exclusive financial circles, a categorization he has been eager to distance himself from.
Goldman and the Romney campaign would not comment on the relationship.
The link between Goldman and Romney is likely to come under continuing scrutiny as the presidential campaign moves forward because of big donations that Goldman employees have made to Romney.
While Goldman employees were among the most generous donors to Barack Obama in 2008, during this election cycle they have swung to Romney, serving as his single biggest source of donations, according to data analysis by the Center for Responsive Politics.
Romney’s stated desire to repeal the 2010 financial reform legislation has been popular with executives at many financial firms, where the reform legislation is viewed as a threat to future profits.
Financial world insiders say that Romney would have had frequent contact with Goldman when he was president of the private equity firm Bain Capital, which bought companies and then took them public. Goldman helped bring some of Bain’s companies public when Romney was at the firm and earned fees for doing so.
Romney was given access to the Goldman public offering during his final year at Bain, 1999. On the day of the offering, Goldman broke with precedent by offering almost all of the newly available shares to its own customers, according to reports at the time.
Goldman has not done this work free of charge. The Romney family trust paid Goldman $168,000 in management fees in 2010. The fees paid by Romney’s own trust, and that of his wife, are not detailed.
Many of the investments that Goldman has made on behalf of Romney and his wife were in foreign companies, including the National Bank of Greece, Nokia and the French luxury retailer LVMH.