Agency Calls on Frist About Timing of Stock Sale
From New York Times:
By DAVID D. KIRKPATRICK
Published: September 23, 2005
WASHINGTON, Sept. 22 - A spokesman for Senator Bill Frist, Republican of Tennessee, said Thursday that the Securities and Exchange Commission had contacted Mr. Frist's office about the sale in June of his shares in HCA, the giant hospital company founded by his family.
Mr. Frist, whose brother Thomas F. Frist Jr. is chairman emeritus and the largest individual shareholder of the company, disclosed earlier this week that on June 13 he asked the managers of blind trusts controlling many of his assets to sell any of his remaining shares in HCA.
The sales occurred just as the share price reached a new peak and shortly before the company's announcement in mid-July of lower-than-expected quarterly results sent the price tumbling.
Mr. Frist, the Senate majority leader and a potential presidential candidate, initially placed more than $10 million in shares of the company in his trusts, but his spokesman said he could not determine how much remained at the time of the sale.
Mr. Stevenson, the spokesman, said the securities commission had contacted Mr. Frist after news organizations published articles this week raising questions about the profitable timing of the sale. Only a few such contacts lead to formal investigations or penalties.
"The majority leader will provide the S.E.C. any information that it needs with respect to this matter," Mr. Stevenson said. "Senator Frist had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock. His only objective in selling the stock was to eliminate the appearance of a conflict of interest."
Mr. Stevenson said on Wednesday that Mr. Frist's holdings in HCA had been the subject of at least 19 news articles or public accusations about a possible conflict of interest.
Spokesmen for the S.E.C. could not be reached for comment on Thursday night; the agency customarily does not comment on its inquiries.
Also from New York Times:
Senator Frist's Stock Sale
It's long been known that the Senate majority leader, Bill Frist, a man deeply involved in rewriting the nation's health-care and medical-malpractice laws, derived most of his wealth from HCA, the hospital company his father and brother helped found. For years, Mr. Frist assured critics that there was no conflict of interest because his HCA money was held in a blind trust.
Blind trust is a term frequently tossed around in political circles. It suggests a complete severing of ties with investments that might create conflicts of interest. Once inside, the money is supposed to lie forgotten, until a fortune pops up at retirement like a wrinkled $5 bill found in the wash.
But that won't happen in Mr. Frist's case because he decided on June 13 to sell the shares. HCA stock, which had plunged below $20 a share back in 1999 because of a federal fraud investigation, had been climbing steadily, reaching a high of $58.22 on June 22, nine days after Mr. Frist told his managers to start selling. By July 8, all the shares of HCA held by Mr. Frist, his wife and his children had been sold.
Five days later, a bad earnings report drove the price down 9 percent in a single day. Since then it has dropped even further.
Mr. Frist's office claims that the sale was intended to avoid the appearance of a conflict of interest as he pursued his legislative agenda. But the emergence of this concern seems strangely convenient for a man who's been pursuing the same agenda throughout his Senate career. The Securities and Exchange Commission should look into this sale.