HCA Subpoenaed, May Involve Frist Sales

  1. Is this kinda like Martha Stewart?
    http://www.cbsnews.com/stories/2005/...8CQ0KMO0.shtml

    ...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....

    ...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....
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  2. 22 Comments

  3. by   elkpark
    From an related (but separate) AP piece in today's Charlotte Observer:

    http://www.charlotte.com/mld/observer/news/12736496.htm

    Papers show Frist not blind on trusts
    WASHINGTON -- Blind trusts are designed to keep an arm's-length distance between federal officials and their investments, to avoid conflicts of interest. But documents show that Senate Majority Leader Bill Frist knew quite a bit about his accounts from nearly two dozen letters from the trust administrators. Frist, R-Tenn., got regular updates on transfers of assets to his blind trusts and sales of assets. He initiated a stock sale of a hospital chain founded by his family just before the stock dived ...
    (emphasis mine ...)

    I thought the whole point of a "blind trust" was supposed to be that you turned over the control of the assets to someone else and had no knowledge of what was being done with those assets, or ability to influence what the administrator does with them. If Frist is getting regular updates and can "initiate a stock sale," then someone please explain to me WTF is "blind" about the trust??????
  4. by   ZASHAGALKA
    The blind trust adminstrator sold the stock, not Frist. It would be hard to argue w/out direct proof the Frist had any connection at all with the sell.

    Why does Frist hold that stock if he has a blind trust? He had a huge stake in the stock before the blind trust - when significant shareholders dump stock, the stock tumbles.

    Holding it in the blind trust is designed to prevent that dumping. But. The blind trustee probably had an interest in divesting Frist of shares over time, thus eliminating the dumping while balancing out the 'blindness' of the trust.

    As far as timing, many investors follow what insiders are doing. Insider buying and selling is a matter of public record. If I had significant stock in a company and that company's leaders were selling, I would be too. If I were a blind trust administrator, it would be unethical not to sell if I thought there was a compelling interest to do so.

    In any case, considering the amount of stock he probably owns, this sale was probably only a very small amount of his total stake. And the blind trust administrator is probably always selling a little at a time. It isn't news when he sells on a low. The fact that he's selling on a high was probably coincidence combined w/ acting based on the public record of insider selling.

    Doesn't sound like much of a story to me.

    ~faith,
    Timothy.
    Last edit by ZASHAGALKA on Sep 25, '05
  5. by   elkpark
    The blind trust adminstrator sold the stock, not Frist. It would be hard to argue w/out direct proof the Frist had any connection at all with the sell.
    Well, hey, you've got me there -- I don't have any direct proof. Apparently, though, CBS News and the AP feel that they do, since the articles state "Frist asked a trustee to sell all his HCA stock in June," and "He initiated a stock sale" (of HCA stock); sounds like they feel confident they could argue that Frist was directly involved in the sale.

    Frist HAS been criticized (or, at least, questioned) all the years he's been in the Senate about the propriety of his voting on healthcare legislation, etc., that would affect/benefit HCA (the family biz) and the value of HCA stock, and his response all this time has been that it's okay because the stock is in a "blind trust." The whole point of a blind trust is supposed to be that the owner of the assets has no knowledge of and no control of the disposition of the assets and, indeed, over time, does not even know what assets are being held in her/his name. That's where the "blind" in the name comes from, and is supposed to be how the whole "blind trust as a mechanism to avoid a conflict of interest" thing works ... Now, we are hearing that the administrators of Frist's "blind trust" communicated with him regularly about purchases and sales of assets, and that he was able to "initiate" stock sales: I say again, someone explain to me how that's a "blind" trust?

    I'm always amazed at how eager the GOP faithful are to immediately dismiss any allegation, however large or small, against any of the Repug leadership -- if the same reports were being made about either of the Clintons, John Kerry, or any other prominent Democrat, the entire GOP would be screaming for their heads (in four-part harmony). But, as long as it's a Repug, anything goes, right?? (We all know that any criticism of a Repug is just vicious, baseless lies by the Liberal Media ...)

    Maybe it's not much of a story -- but it's enough of a story that both the SEC and the US Dept. of Justice are investigating ... It will be interesting to see how the investigations turn out.
  6. by   ZASHAGALKA
    Quote from elkpark
    I'm always amazed at how eager the GOP faithful are to immediately dismiss any allegation, however large or small, against any of the Repug leadership -- if the same reports were being made about either of the Clintons, John Kerry, or any other prominent Democrat, the entire GOP would be screaming for their heads (in four-part harmony). But, as long as it's a Repug, anything goes, right?? (We all know that any criticism of a Repug is just vicious, baseless lies by the Liberal Media ...).
    Not at all. As a member of the Board, Hiliary had tons of Wal-mart stock held in 'blind trust'. There was always allegations that it was being manipulated in her interest.

    And my response then is the same as my response to the Frist allegation now: OF COURSE IT WAS BEING MANIPULATED IN HER INTEREST - THAT'S WHAT AN ADMINISTRATOR DOES!

    Besides, feel free to take pot shots at Frist - I'd rather he not be the nominee. Just realize that this particular pot shot is probably baseless.

    I'm sorry, I just don't see how someone that wants to be President would touch this third rail. I'm not saying he isn't a 'greedy republican'; I'm saying he's an ambitious one that knows there are certain rules that must be held sacrosanct if you want to grasp the brass ring. This is one of them.

    ~faith,
    Timothy.
    Last edit by ZASHAGALKA on Sep 25, '05
  7. by   grannynurse FNP student
    Quote from ZASHAGALKA
    Not at all. As a member of the Board, Hiliary had tons of Wal-mart stock held in 'blind trust'. There was always allegations that it was being manipulated in her interest.

    And my response then is the same as my response to the Frist allegation now: OF COURSE IT WAS BEING MANIPULATED IN HER INTEREST - THAT'S WHAT AN ADMINISTRATOR DOES!

    Besides, feel free to take pot shots at Frist - I'd rather he not be the nominee. Just realize that this particular pot shot is probably baseless.

    I'm sorry, I just don't see how someone that wants to be President would touch this third rail. I'm not saying he isn't a 'greedy republican'; I'm saying he's an ambitious one that knows there are certain rules that must be held sacrosanct if you want to grasp the brass ring. This is one of them.

    ~faith,
    Timothy.

    Gee this is the first time I've heard of Hiliary's hold tons of Wal Mart stock. You would have thought that Rudy would have known and jumped on her stock holdings. Now we all do know that Frist's family's proprietory interest in HCA. And we all know how ethical that corporation is, now don't we.

    Grannynurse
  8. by   elkpark
    And my response then is the same as my response to the Frist allegation now: OF COURSE IT WAS BEING MANIPULATED IN HER INTEREST - THAT'S WHAT AN ADMINISTRATOR DOES!
    I agree with you that the job of the administrator of the trust is to manage the assets to the advantage of the owner. But the point of a "BLIND TRUST" is that the owner (Frist, in this case) is not supposed to even have any knowledge of what decisions the administrator is making, let alone have any control over sales or purchases of assets in the trust. Hence, the term "BLIND trust."

    The issue here is not that the trust is being managed to benefit Frist -- that is, as you point out, the administrator's job. The issue is that Frist is (allegedly) being kept informed of what the administrator(s) are buying and selling for the trust and is able to tell the administrator(s) that he wants the HCA stock sold and they follow his instructions. If that is the case, it is not a "blind" trust.
  9. by   ZASHAGALKA
    Quote from elkpark
    The issue here is not that the trust is being managed to benefit Frist -- that is, as you point out, the administrator's job. The issue is that Frist is (allegedly) being kept informed of what the administrator(s) are buying and selling for the trust and is able to tell the administrator(s) that he wants the HCA stock sold and they follow his instructions. If that is the case, it is not a "blind" trust.
    There's no more way to hide from Frist that he has HCA stock than it was to hide from Clinton that she had Wal-mart stock. Simply put, both had too much to readily divest themselves.

    I'm saying that this allegation doesn't pass the smell test. Frist wants to be President. Every Jr. Congressman has to take a seminar about 'the rules' and this is certainly one of the major ones.

    And if he didn't learn it there, you can bet his Presidential Campaign Advisors have taught it in remedial.

    I'm not saying that Frist wouldn't act in his self-interest. But the man is a millionaire many times over. His current self-interest has to do with his ambition - not money. Acting in that self-interest, I see no way he'd violate a rule that would certainly cost him that brass ring.

    That would be stupid and counterproductive. And even if HE doesn't realize that, his advisors do.

    It's simply not a credible 'allegation'.

    And if somebody made the allegation of Clinton today, I'd snort and say "No way she's that stupid!" As much as I dislike her, I at least respect that the woman has brains. And basically I feel the same about Frist. I'm no fan, but he's not an idiot, either. AND EVEN IF HE WAS, HIS ADVISORS AREN'T AND THEY AREN'T BEING PAID MILLIONS TO BE KEPT OUT OF LOOPS LIKE THIS. YOU CAN BET HIS PERSONAL LIFE/FINANCES ARE THEIR NUMBER ONE CONCERN. Every major politician learned the Gary Hart lesson, years ago.

    Personally, I'd like to see Romney get the nod, although I think, sadly, only McCain can beat Clinton-redux.

    ~faith,
    Timothy.
    Last edit by ZASHAGALKA on Sep 25, '05
  10. by   sunnyjohn
    Well the investigation is being held because information has it that Frist asked the blind trust director to sell his HCA shares.

    As a broker, I do find all the informaion fishy, but I've seen very rich people do very stupid things in the name of profit. Ah, greed.

    No, of course he could not sell it himself, but it would not be much of a blind trust if this did happen.

    Personally, I like Frist, especially after he recently took his own stand for stem cells. I hope this is not true.
    Last edit by sunnyjohn on Sep 26, '05
  11. by   Judee Smudee
    Quote from ZASHAGALKA
    The blind trust adminstrator sold the stock, not Frist. It would be hard to argue w/out direct proof the Frist had any connection at all with the sell.

    Why does Frist hold that stock if he has a blind trust? He had a huge stake in the stock before the blind trust - when significant shareholders dump stock, the stock tumbles.

    Holding it in the blind trust is designed to prevent that dumping. But. The blind trustee probably had an interest in divesting Frist of shares over time, thus eliminating the dumping while balancing out the 'blindness' of the trust.

    As far as timing, many investors follow what insiders are doing. Insider buying and selling is a matter of public record. If I had significant stock in a company and that company's leaders were selling, I would be too. If I were a blind trust administrator, it would be unethical not to sell if I thought there was a compelling interest to do so.

    In any case, considering the amount of stock he probably owns, this sale was probably only a very small amount of his total stake. And the blind trust administrator is probably always selling a little at a time. It isn't news when he sells on a low. The fact that he's selling on a high was probably coincidence combined w/ acting based on the public record of insider selling.

    Doesn't sound like much of a story to me.

    ~faith,
    Timothy.
    The article I read is saying that the Security and Exchange Commission is turning a jaundiced eye toward this whole business. If this is all so innocent why are they investigating?:stone
  12. by   grannynurse FNP student
    Quote from ZASHAGALKA
    Not at all. As a member of the Board, Hiliary had tons of Wal-mart stock held in 'blind trust'. There was always allegations that it was being manipulated in her interest.

    And my response then is the same as my response to the Frist allegation now: OF COURSE IT WAS BEING MANIPULATED IN HER INTEREST - THAT'S WHAT AN ADMINISTRATOR DOES!

    Besides, feel free to take pot shots at Frist - I'd rather he not be the nominee. Just realize that this particular pot shot is probably baseless.

    I'm sorry, I just don't see how someone that wants to be President would touch this third rail. I'm not saying he isn't a 'greedy republican'; I'm saying he's an ambitious one that knows there are certain rules that must be held sacrosanct if you want to grasp the brass ring. This is one of them.

    ~faith,
    Timothy.
    As Mrs Clinton is a former senator of mine, I would appreciate you providing the source of her holding of tons of Wal-Mart stock.

    Grannynurse
  13. by   Nancy2
    Can you imagine if the SEC did not investigate this aligation? That would be much worse for Frist. Then the rumor would be that he somehow had control of the SEC. I'm glad they are investigating. This process will either clear him of wrongdoing or come up with that proof that some of you have spoke of. As of now they are only aligations. This is still America where we are inocent until proven guilty!
    I'm curious as to how the media will tell it if he is found to have done nothing wrong. (page 20, small headline?)
  14. by   wooh
    Totally unbelievable since all of us HCA employees have to take Ethics & Compliance classes every single year. I mean, as long as us nurses and housekeepers and cafeteria staff take Ethics & Compliance, there couldn't possibly be any wrongdoing involving HCA!!!

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