Senate Majority Leader Bill Frist (R-Tenn.) has been rather quiet since becoming the focus of SEC and Justice Department investigations. Yesterday, however, Frist finally emerged and started laying out a defense.
Senate Majority Leader Bill Frist, facing federal inquiries into his sale of hospital company stock, said yesterday that he had no inside information about the stock’s likely performance and sold the shares solely to avoid a possible conflict of interest in case he seeks higher office.
Frist (R-Tenn.), who is weighing a 2008 presidential bid, said he began taking steps to sell all the stock held in a trust about three months before its value sharply fell. The Justice Department and the Securities and Exchange Commission are looking into his June sale of all his holdings in HCA Inc., a Nashville-based company that his family founded. The next month, the stock’s value dropped 9 percent after the company issued a disappointing earnings forecast.
Frist, a wealthy surgeon, briefly addressed reporters in the Capitol but took no questions in making his first public comments since the inquiries were announced late last week. Rejecting the notion that he may have benefited from inside information, he said: “I had no information about HCA or its performance that was not publicly available when I directed the trustees to sell the stock.”
That point about initiating the sale several months in advance is important. Part of the reason Frist’s stock sale raised eyebrows was the timing — his “blind trust” sold shortly before a discouraging SEC filing drove the stock price down. If Frist began the process months in advance, the timing appears a lot less suspicious.
On the other hand, that “conflict of interest” argument still just doesn’t work.
He noted that for years he repeatedly had said his ownership of HCA stock posed no conflict of interest for his Senate duties. Those statements frequently angered some consumer and victims’ rights groups because of the large amount of health care legislation before the Senate, including the Medicare prescription drug plan.
“The complaints and questions have persisted,” Frist said yesterday. “Because of these continuing questions, and looking ahead at my final years in the Senate and what might come next, I have for some time wanted to eliminate even the possibility of an appearance of a conflict by totally divesting of any HCA stock in my family’s trust.”
I’m afraid this makes as much sense this week as it did last week.
If Frist had the appearance of a conflict of interest, it’s been there for 11 years. When Bill Frist led the fight against Clinton’s “Patients’ Bill of Rights” in 1999, for example, many noted that it was troubling for a lawmaker with stock in a company that might suffer under the White House plan to take such an active role. Nonsense, said Frist, who never hesitated to defend the industry with which he had financial (and familial) ties.
I, frankly, don’t know enough about insider trading to know how close to the legal line Frist got, but it’s only one part of the controversy. Frist still needs to explain why, all of a sudden, he felt the need to divest when he did — and then explain why he was far less than truthful about the nature of his stock ownership.