Frist Stock Sale Under Scrutiny
The Securities and Exchange Commission and federal prosecutors are investigating Senate Majority Leader Bill Frist's sale of stock in HCA Inc., statements issued Friday said.
A release from the Nashville-based company said federal prosecutors for the Southern District of New York issued a subpoena for documents the company believes may be related to the sale of its stock by the senator.
A statement from the Frist's office confirmed the SEC is looking into the sale.
"Not surprisingly, the Securities and Exchange Commission contacted Senator Frist's office after the story appeared in the press about the sale of his Hospital Corporation of America stock," Frist spokesman Bob Stevenson said in an e-mail. "The Majority Leader will provide the SEC any information that it needs with respect to this matter."
Frist traded using only public information, and only to eliminate the appearance of a conflict of interest, Stevenson said.
The spokesman couldn't immediately be reached for further comment. An HCA spokesman also wasn't immediately available for comment.
HCA, the nation's largest for-profit hospital company, was founded by Frist's father and his brother was formerly its CEO and chairman and remains on the board of directors.
Frist asked a trustee to sell all his HCA stock in June, near a 52-week stock price peak of $58.40 and at the same time HCA insiders were selling off shares. Reports to the Securities and Exchange Commission showed insiders sold about 2.3 million shares, worth about $112 million, from January through June, said Mark LoPresti of Thomson Financial.
The sale came about two weeks before the company issued a disappointing earnings forecast that drove its stock price down almost 16 percent by mid-July. They still have not recovered, closing Thursday at $45.90.
The value of Frist's stock at the time of the sale was not disclosed. Earlier this year, he reported holding blind trusts valued at $7 million to $35 million.
The sale of stock was first reported Monday by Congressional Quarterly. On Tuesday, the Associated Press reported that the stock was sold at or near its peak between June 13, when Frist asked the shares to be sold, and July 1, when he was told the sale was complete. On July 8 he was informed that his wife and children's shares had also been sold as per his request, his spokeswoman Amy Call said.
For years, Frist was criticized for holding HCA stock while directing legislation on Medicare reform and patient issues. His office has consistently deflected criticism by noting that his assets were in a blind trust and not under his active control.
Frist, a Tennessee Republican, is widely considered a potential presidential candidate in 2008.
HCA said the subpoena seeks the "production of documents," and said it plans to fully cooperate with the district attorney's investigation.
On Thursday, SEC spokesman John Nester would neither confirm nor deny that Frist or any officer or director of HCA is the subject of an investigation, citing the agency's policy.
Shares of HCA were up 25 cents to $46.15 in early trading on the New York Stock Exchange.