Bill Frist: No Insider Information

Justice Department Looking Into Majority Leader's Stock Sales

(CBS/AP)  Cox, who was in Congress for 16 years as a California Republican and left the House to assume the SEC job last month, had been a member of the GOP leadership in Congress for the past 10 years.

"Because of my service in the congressional leadership for the last 10 years, I have recused myself in this matter," Cox said in a statement. "The purpose of the recusal is to avoid any appearance of impropriety in the (SEC's) consideration of this case."

Cox's congressional campaign fund donated $1,000 to Frist in 2000, according to Federal Election Commission records. That donation was not mentioned in the statement issued by Cox and was not given as a reason for his recusal from the SEC's investigation.

Frist has hired two private attorneys who specialize in securities litigation and insider trading cases: William McLucas, a former SEC enforcement director, and Harry Weiss, a former SEC attorney who was a co-author of a text titled "Preventing Insider Trading." Their representation of Frist was confirmed by their law firm, Wilmer Cutler Pickering Hale and Dorr. The involvement of the firm was first reported in Monday's editions of The Wall Street Journal.

Also Monday, Citizens for Responsibility and Ethics in Washington, a liberal-leaning watchdog group, said it had had filed a complaint against Frist with the Senate Ethics Committee alleging that he engaged in "apparent insider trading" and then tried to cover it up.

The Tennessee Republican's sale of the stock from several blind trusts this summer came about two weeks before the company issued a disappointing earnings forecast that drove its share price down almost 16 percent by mid-July.

Frist sold the stock at a time when top executives and directors of HCA — including the chief executive and the treasurer — also were selling off shares worth a total $112 million.

Documents show that Frist was updated several times about his investments in HCA and other transactions even though they were held in blind trusts. Despite the updates, Frist has said he didn't know what was in the trusts, specifically denying knowledge of his HCA holdings.

Frist's brother, Thomas Frist Jr., is a former chief executive of HCA and is now a director and the largest individual shareholder in the company.

President Bush chose Cox, a free-market conservative and former securities lawyer, in June to lead the SEC after the surprise resignation of then-chairman William Donaldson.