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Frist stock investigation grows
WASHINGTON—The federal government broadened its inquiry Friday into Senate Majority Leader Bill Frist's sale of stock in the giant hospital chain that his family founded.
The company, Nashville, Tenn.-based HCA, and Frist's office said Friday that investigators from the U.S. Attorney for the Southern District of New York had requested documents related to the sale, which occurred shortly before the stock price plunged.
The Securities and Exchange Commission, which regulates the securities markets, already had contacted Frist's office following press reports earlier this week about the stock sale.
Frist, a Tennessee Republican and a potential presidential candidate in 2008, directed trustees of his blind trust to sell the stock on June 13. The sale occurred in stages and was complete by July 8. On July 13, HCA cautioned investors that it wouldn't meet its earnings forecast. The news drove the stock's price down 9 percent that day to $50.05. Since then, it's slipped further, closing Friday at $47.60.
Typically, the SEC and federal prosecutors investigate such sales to determine whether the seller benefited from illegal insider information. Frist's brother is the chairman emeritus of HCA.
"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," Frist spokesman Bob Stevenson said.
Frist reported this year that his blind trusts were valued between $7 million and $35 million. The trusts don't report what stocks they hold. In 1999, before Frist created the blind trusts, he reported in his Senate financial disclosure report that he, his wife and children held more than $5 million in HCA stock.
HCA operates about 190 hospitals and 90 surgery centers in 23 states, England and Switzerland. Initially called Hospital Corp. of America, it was founded by Frist's father, Thomas Frist, and his older brother Thomas Frist Jr.
Critics say Frist's stock ownership presents a conflict of interest with his legislative work on health issues. Stevenson said Friday that Frist's "only objective in selling the stock was to eliminate the appearance of a conflict of interest."
Though an HCA announcement on Friday said the U.S. attorney's office had subpoenaed company documents, Stevenson said neither Frist nor his office had received a subpoena.
"As with the SEC, the majority leader will provide the U.S. attorney's office with any information that it needs with respect to this matter," Stevenson said.
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(c) 2005, Knight Ridder/Tribune Information Services.
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