Perfect Timing for Dr. Frist
The Washington Post reported this morning on Majority Leader Bill's Frist's "lucky" timing in the sale of all of his stock in his family-founded Nashville-based hospital chain, HCA Inc. Just two weeks after the sale the stock took an almost 9 percent nose-dive.
Hmmmmm. Anybody else thinking "insider" information?
Not possible, a Frist spokeswoman told the Nashville Tennessean since the stock was in a "blind trust." Because of the rules governing blind trusts, we don't know -- and he's not supposed to know -- how much money he made from the sale, but it's fair to guess it wasn't chump change. This is a man who reported a net worth of some where between $15 and $45 million in his last annual personal financial disclosure statement. A "regular" man of the people.
His "cover" for selling the stock is that he has rid himself of conflict of interest charges on health care issues as he serves in the Senate or positions himself for a presidential run.
<span>Democrats and "the liberal media" should be all over this. If there is one thing that I have zero tolerance for it is people (especially elected officials) who use their privilege to profit personally at the expense of others.
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</span><span>This isn't a small issue either. A lot of Americans own stock due to 401k plans and they are losing out on their retirement money so Bill Frist can get richer.
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September 21, 2005 1:23 PM | Reply | Permalink
If a Democrat did this in the midst of an election he'd be crucified by Fox/Hannity/Limbaugh/O'Reilly, his Republican opponent AND the SEC. Pretending otherwise redefines disingenuous.
September 21, 2005 2:46 PM | Reply | Permalink
I don't think the bit in bold is quite right: he has to sign his tax return, after all. And why shouldn't he know how much he's made or lost after the trade happens?
A good question would be who the trustee is. If it's Frist's cousin, it's reasonable to speculate that a tip might have been passed along; if it's U.S. Trust or some other "professional" trustee, probably not.
Also: did any other members of the Frist family -- the ones who don't have any political career -- sell significant blocks of stock prior to the drop? If not, that suggests the timing of Sen. Frist's sale was just a lucky coincidence (or a shrewd guess by the trustee).
I don't like Bill Frist, but this seems like smoke not fire at this point.
September 21, 2005 2:50 PM | Reply | Permalink
From the article:
Frist's shares were sold by July 1 and those of his wife and children by July 8,
September 21, 2005 3:04 PM | Reply | Permalink
and he tops it off with this wonderful image http://billmon.org/archives/fristcnote.jpg
September 21, 2005 3:32 PM | Reply | Permalink
When we're talking about a "blind trust, who's supposed to be blind? Frist? or the American voter?
Compassionate conservativism. Evidence of WMD's. American honesty and competence. Mission accomplished. Restoring honor to the White House. Blind trust.
September 21, 2005 3:57 PM | Reply | Permalink
September 21, 2005 5:43 PM | Reply | Permalink
I don't like Bill Frist, but this seems like smoke not fire at this point.
I share your dislike for Senator Frist, but I see bright dancing flames, not smoke. The report I read said Senator Frist ordered that his stock be sold - so much for the "blind trust". And, his family members following suit also argues against this being a trustee decision. If he truly was concerned about the apparent conflict of interest, he should have had his "blind trust" sell off his stock long ago, not wait for the most opportune time to have the trust do so. A good rule of thumb is, "if a Republican office holder does something, it is most likely to be because it directly benefits that office holder". Senator Frist is anecdotal proof of that rule.
September 21, 2005 8:35 PM | Reply | Permalink
It would be nice if some Democratic hacker could break into his PC and find out the real story.
September 21, 2005 8:49 PM | Reply | Permalink
But Frist himself directed that the shares be sold, so it doesn't really matter who the trustee is, does it?
September 22, 2005 2:33 AM | Reply | Permalink
And, unless he doesn't speak with his family and friends, he had an "inkling" that things weren't going well at HCA.
The blind trust adds a layer of protection for Dr. Frist. But he knows the trustee. He picked the trustee when he created the trust. And you can bet that he and the trustee discussed this sale and that he had information that only HCA insiders would.
But I'm sure he's also smart enough not to have communicated via email or any other means that can be documented. Unless the Justice Dept. started tapping his phone after he split with Bush on stemcell research.....
September 22, 2005 5:36 AM | Reply | Permalink
Maybe this is just a matter of semantics, but related to Josh's post about today's WP article, which he quotes:
Was the financial information reported by HCA a statement of earnings or a restatement? There is a diference. While there is a difference in the two, I don't know if the SEC rules change depending upon statement or restatement...logic says no, but...
September 22, 2005 6:41 AM | Reply | Permalink
How different is what Frist did from what Martha Stewart served some months in prison for?
Both bailed out on a stock whose price was about to drop, based on insider information. The buyers of the stock did not have that information. Other holders of the stock did not have that information.
What other data points do we need?
How many months should Frist serve? How will the ankle bracelet look, and will it protect us from after-hours schmoozing with lobbyists, or will it simply change the venue to within his home?
Is this the quality of the leader of the majority party? No wonder we're in a fix!
September 22, 2005 8:11 AM | Reply | Permalink
The rules allow a blind trustee to ask the trust operator to sell stock in order to avoid an appearance of conflict of interest. If Frist gave the instruction because he thought it likely it might drop in value, that does violate the rules -- but it can't be proven, and it's pointless to get all het up about it. There's plenty of clearly criminal activity going on, from DeLay's activities in Texas to the White House's involvement in the Flame-Wilson situation. Let's not sweat the small stuff.
And let's come up with some positive progressive solutions instead of reflexively attacking everything Republican. That's the Republican way, but it only works if you have an army of mindless puppets.
September 22, 2005 8:47 AM | Reply | Permalink
For one, HCA is is awaiting a ruling on a $400 million tax dispute with the IRS which is due sometime soon.
Two, HCA traded at about $40 at 12/31/04. When Frist sold, it was up to about $55. It looks like Frist didn't expect the stock to rebound in the second half.
Last year, HCA borrowed to buy back shares. This year, it issued new shares and paid off debt.
There was no apparent reason for the HCA stock to increase 40% in less than six months. Results were not that good.
September 22, 2005 12:56 PM | Reply | Permalink
excerpts from http://ethics.senate.gov/downloads/pdffiles/trust.pdf, which is a guideline for senators setting up their blind trusts. Trusts must be approved by a particular ethics office.
I looked at the insider trading information for HCA available via Yahoo, and no insiders bought any stock during the last 6 months, while many dumped stock. Frist's brother disposed of bits and pieces of stock, as I recall -- not large chunks. But I consider the fact that all of the insiders were cashing in their stock options, and none were acquiring stock during the period rather persuasive. Even the retirement plan was selling off shares, on two occasions! And yet the price continued to rise: the smart money had left, and the rest didn't know what they knew, and kept buying.
September 24, 2005 7:31 AM | Reply | Permalink