Virginia Democratic gubernatorial candidate Terry McAuliffe, who served as chairman of GreenTech Automotive from 2010 to 2012, wrote an op-ed in the Washington Post on Friday that offered an unusual view of the fiduciary responsibilities of the chairman of a multi-million dollar start up company.
The Post reported in July that the Securities and Exchange Commission is investigating the promises made to investors in a $50 million 2009 Private Placement Memorandum, the proceeds of which were invested in GreenTech. In a novel interpretation, McAuliffe wrote that “the investigation appears to be looking at a document allegedly prepared for potential investors — something I was not responsible for as chairman.”
Douglas Y. Park, a nationally recognized expert on corporate governance with a Ph.D. from the Stanford Graduate School of Business and a J.D. from the University of Michigan, said that McAuliffe may have more of a fiduciary responsibility with regards to the company’s fundraising documents than he thinks. “Under Delaware law, corporate officers and directors have the same fiduciary duties to the corporation,” he told Breitbart News. “Whether he was an senior officer or a board member he can be held responsible for statements that are made in the Private Placement Memorandum. A good plaintiffs’ securities lawyer is going to go after him, the executives, and the board members.”
During McAuliffe’s tenure as chairman of GreenTech, the company raised money based on three Private Placement Memoranda. The first one was completed in August, 2009, six months prior to McAuliffe’s assumption of the chairman’s position. However, the company raised only $2.5 million from that offering document prior to March 2010, and raised an additional $5 million after McAuliffe became chairman.
As chairman, McAuliffe was both a member of the board of the parent company of GreenTech Automotive, but also actively participated in soliciting EB-5 investments from foreign nationals.
The two subsequent Private Placement Memoranda were written and circulated while McAuliffe was chairman.
McAuliffe has often mentioned his “fiduciary responsibilities” to other shareholders when it came to the decision on location of the proposed but not yet built electric vehicle manufacturing facility. He told a Virginia Democratic gathering in May 2011 that he had a “fiduciary responsibility” to locate the facility in Mississippi rather than Virginia, where he lives and is running for governor, because Mississippi offered the company more financial incentives.