Two Months After Hiring Drexel, The SEC Filed Extensive Complaint Alleging Insider Trading And Market Manipulation Romney Defended The Decision To Keep Using Drexel In Transaction.
On Sept. 7, 1988 -roughly two months after Bain Capital hired Drexel to issue junk bonds - the Securities and Exchange Commission filed a 184-page complaint against Drexel, Milken and others alleging insider trading schemes,manipulation of stock prices and other violations of federal securities laws. Bain Capital was put in the position of trying to close a deal with junk bonds from a company being sued by the SEC. Romney and Bekenstein defended their decision to hire Drexel before the SEC suit at a time when rumors of the investigation were rife on WallStreet as well as after the suit was filed.
(Mitchell Zuckoff and Ben Bradlee Jr., Romneys Business Record Gives Larger Picture,
The Boston Globe, 8/8/94)
and
Romney Later Reminisced About The Glorious Days Of Drexel Burnham, Saying It Was Fun While It Lasted.
The deal that jump-started Bains business came along in 1986, a $200 million buyout of Accuride Corp., the wheel and rim manufacturing unit of Firestone Co., Phoenix. Bain financed the deal with just $5 million of its own equity and borrowed the rest. Just 18 months later, Bain sold Accuride to Phelps Dodge Co. for $320 million. Its return on its investment: $130 million. That was in the glorious days of Drexel Burnham, Mr. Romney recalled. It was fun while it lasted, but fortunately, it came to an end.
(Jennifer Goldblatt, Boston Buyout Firm Cashes In by Adding Value, The American Banker , 12/23/97