Bill Frist Insider Trader?
The Washington Post reported the following yesterday.
Senate Majority Leader Bill Frist, a potential presidential candidate in 2008, sold all his stock in his family's hospital corporation about two weeks before it issued a disappointing earnings report and the price fell nearly 15 percent.
Frist held an undisclosed amount of stock in Hospital Corporation of America, based in Nashville, the nation's largest for-profit hospital chain. On June 13, he instructed the trustee managing the assets to sell his HCA shares and those of his wife and children, said Amy Call, a spokeswoman for Frist.
Frist's shares were sold by July 1 and those of his wife and children by July 8, Call said. The trustee decided when to sell the shares, and the Tennessee Republican had no control over the exact time they were sold, she said.
HCA shares peaked at midyear, climbing to $58.22 a share on June 22. After slipping slightly for two weeks, the price fell to $49.90 on July 13 after the company announced its quarterly earnings would not meet analysts' expectations. On Tuesday, the shares closed at $48.76.
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.
Blind trusts are used to avoid conflicts of interest. Assets are turned over to a trustee who manages them without divulging any purchases or sales and reports only the total value and income earned to the owner.
To keep the trust blind, Frist was not allowed to know how much HCA stock he owned, Call said, but he was allowed to ask for all of it to be sold.
This may or may not be insider trading. Further proof would be needed. You would think someone like Frist would know better but of course there are plenty of politicians who don't think they need to play by the rules they help to create.
What this story does is give the Democrats ammunition against Frist if he runs for President in 2008. The timing of the stock sale rightly or wrongly is going to look suspicious.
Professor Bainbridge has an excellent write up on insider trading laws related to the Frist story. However the laws did make my eyes glaze over. Only lawyers can understand laws this technical and I think I have a decent lay knowledge of the law.
I'd just like to remember where I read a saying. It went something like- If you have to write down your ethics rules the battle is already lost.
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