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Senate Majority Leader Bill Frist faces a serious investigation into his finances after apparently directing the sale of stock while his assets supposedly remained in a blind trust -- and dumping family-business stock just before the bottom dropped out. Today's Page One story in the Washington Post reports that Frist specifically ordered the divestiture of family shares of the family business:
Senate Majority Leader Bill Frist is facing questions from the Justice Department and the Securities and Exchange Commission about his sale of stock in his family's hospital company one month before its price fell sharply.
The Tennessee lawmaker, who is the Senate's top Republican and a likely candidate for president in 2008, ordered his portfolio managers in June to sell his family's shares in HCA Inc., the nation's largest hospital chain, which was founded by Frist's father and brother.
A month later, the stock's price dropped 9 percent in a single day because of a warning from the company about weakening earnings. Stockholders are not permitted to trade stock based on inside information; whether Frist possessed any appears to be at the heart of the probes.
The AP reports this morning that far from being a completely blind trust, Frist knew exactly how much HCA stock he had in his portfolio, and issued misleading statements about it:
Frist sold his HCA stock from several blind trusts this summer, at a time when insiders in the company also were selling off shares worth $112 million from January through June. Frist aides say he sold his stock to avoid any appearance of a conflict of interest.
Frist, asked in a television interview in January 2003 whether he should sell his HCA stock, responded: "Well, I think really for our viewers it should be understood that I put this into a blind trust. So as far as I know, I own no HCA stock"
Frist, referring to his trust and those of his family, also said in the interview, "I have no control. It is illegal right now for me to know what the composition of those trusts are. So I have no idea."
Documents filed with the Senate showed that just two weeks before those comments, the trustee of the senator's trust, M. Kirk Scobey Jr., wrote to Frist that HCA stock was contributed to the trust. It was valued at $15,000 and $50,000.
The documents filed by the trustees of Frist's blind trusts were obtained by The Associated Press on Friday.
If the documents prove to be authentic -- and we all know how important it is to verify that -- then Frist has landed himself into a world of trouble. As insiders started dumping HCA stock, Frist jumped in along with them, having illegal knowledge of his portfolio. Compound that with possible insider information and Frist may have serious legal problems over the next few years, the kind that lands corrupt politicos into Club Fed for extended vacations.
These charges seem rather specific, and if the AP did their homework properly (a big if, of course), the evidence gives at least some credence to the charges. It seems appropriate, with this kind of investigation going on, for Frist to step down as Senate Majority Leader and allow another Republican to take the reigns. We have too much at stake to have a distracted leadership in the upper chamber let the agenda go adrift. We need a strong Majority Leader who can keep the Democrats on the hot seat for their obstructionism and also keep a spotlight on Chuck Schumer's own emerging scandal. I'd prefer to see George Allen step into the #1 slot.
In the meantime, Frist needs to do some explaining to his home state constituents. They sent him to Washington, and they need to know whether they made a mistake.Sphere It View blog reactions
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