Senator Sold Stock Before Price Dropped
Wednesday, September 21, 2005
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.
Frist, a surgeon first elected to the Senate in 1994, had been criticized for maintaining the holdings while dealing with legislation affecting the medical industry and managed care. Call said the Senate Select Committee on Ethics has found nothing wrong with Frist's holdings in the company in a blind trust.
"To avoid any appearance of a conflict of interest, Senator Frist went beyond what ethics requires and sold the stock," Call said. Asked why he had not done so before, she said, "I don't know that he's been worried about it in the past."
An HCA spokesman said the company had no part in Frist's decision.
Frist's father, Thomas, founded the company, and his brother, Thomas Jr., is a director and leading stockholder. The family is worth $1.1 billion, according to Forbes magazine.
HCA -- formerly known as Columbia HCA Healthcare Corp. -- has been a top contributor to the senator's campaigns, donating $83,450 since 1989, according to the Center for Responsive Politics.
The sale of the shares was first reported by Congressional Quarterly.