Senate Majority Leader Bill Frist, a potential presidential candidate in 2008, sold all his stock in his family's hospital corporation about two weeks before it issued a disappointing earnings report and the price fell nearly 15 percent.
Frist held an undisclosed amount of stock in Hospital Corporation of America, based in Nashville, Tenn., the nation's largest for-profit hospital chain. On June 13, he instructed the trustee managing the assets to sell his HCA shares and those of his wife and children, said Amy Call, a spokeswoman for Frist.
Frist's shares were sold by July 1 and those of his wife and children by July 8, Call said. The trustee decided when to sell the shares, and the Tennessee Republican had no control over the exact time they were sold, she said.
Bill Frist to Follow in Martha Stewart's Footsteps?
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AP: Frist Accumulated Stock Outside Trusts
By LARRY MARGASAK and JONATHAN M. KATZ, Associated Press Writers Tue Oct 11, 7:35 PM ET
WASHINGTON - Outside the blind trusts he created to avoid a conflict of interest, Senate Majority Leader Bill Frist earned tens of thousands of dollars from stock in a family-founded hospital chain largely controlled by his brother, documents show.
The Tennessee Republican, whose sale this summer of HCA Inc. stock is under federal investigation, has long maintained he could own HCA shares and still vote on health care legislation without a conflict because he had placed the stock in blind trusts approved by the Senate.
However, ethics experts say a partnership arrangement shown in documents obtained by The Associated Press raises serious doubts about whether the senator truly avoided a conflict.
I admit this looks shady, but I have to say I'd have a hard time avoiding perceived conflicts of interest more generally. For example, I could envision myself invested in biotech and nanotech stocks and wanting to run for Congress on a platform including (among other things) support for high-tech research. I wouldn't really want to completely abandon my material stake in the field, since I consider it a hot growth industry worldwide over the next 20 years. I hope that doesn't make me so hopelessly corrupt that I don't think that's even doing anything wrong. Just a technology enthusiast.
What makes Frist's alleged conduct worse, if the allegations are true, is the fact that he sold out right before a fall in a manner that seems hard to explain by coincidence. I wouldn't have taken issue with his holding of HCA just sitting there. However, in that respect, insider trading is independent of his role in Congress; Martha wasn't a legislator, after all.
gramarye wrote I admit this looks shady, but I have to say I'd have a hard time avoiding perceived conflicts of interest more generally.
Well I don't think the conflict of interest was any sort of issue (or at least I don't recall ever hearing of it before hand) until AFTER the alleged insider trading took place. I think it's just part of the bigger picture.
If you wanted to invest in bio-tech and also push legislature for bio-tech, no big deal... but if you sold some stock before a big crash, then that "conflict of interest" becomes a big deal because the investigators will want to look into your relationships with industry leaders. So yeah, I think it's only really an issue after the fact.
Sources: Frist subpoenaed in probe of stock sales
Frist spokesman says SEC inquiries are routine
Thursday, October 13, 2005; Posted: 6:03 p.m. EDT (22:03 GMT)
WASHINGTON (Reuters) -- Senate Majority Leader Bill Frist has been subpoenaed by the U.S. Securities and Exchange Commission to turn over records in a probe of possible insider trading, sources close to the case said Thursday.
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