Friday, September 23, 2005

The investigation of Bill Frist

Meanwhile, in non-Rita-related news:

A couple of days ago, I called Senate Majority Leader Bill Frist (R-TN) a "crook" for profiting from an ethically-dubious and perhaps illegal sale of HCA stock just before the share price tumbled following a disappointing earnings report. That is, for insider trading. Dr. Frist, of course, has denied any wrongdoing, but the truth may yet come out:

Federal prosecutors contacted Senate Majority Leader Bill Frist's office about his sale of stock in HCA Inc., the hospital operating company founded by his family. The Securities and Exchange Commission began an investigation, too, and prosecutors asked HCA to turn over documents about the transaction.

Prosecutors from the Southern District of New York contacted Frist's office ''to inquire about the sale,'' spokesman Bob Stevenson said Friday. He did not say when the office was contacted, but said neither the senator nor his office had received a subpoena.

Frist's office previously confirmed the SEC was looking into the sale.

Read the article for the financial details. For here's the problem:

For years, Frist was criticized for holding HCA stock while directing legislation on Medicare reform and patient issues. He and his office have consistently deflected criticism by noting that his assets were in a blind trust and not under his active control.

But Senate ethics rules allowed him more control than most observers realized. Under the guidelines, senators can directly order the sale of any asset in the trust to avoid the appearance of a conflict of interest. The senator also can communicate to the trustee matters of concern, including "an interest in maximizing income or long-term capital gain."

Frist may or may not have done anything wrong and he may or may not be a "crook". His stock sale, however, looks bad, illegal or not. After all, he clearly maximized his and his family's "income or long-term capital gain," and, regardless of questionable Senate rules, his timing was perfect.

Just a little too perfect.

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