Two federal agencies are investigating Senate Republican leader Bill Frist’s sudden sale of all of his stock in the hospital-management company founded by his father.
The HCA Inc. stock value dropped 14.2 percent a month after the Tennessee lawmaker directed the manager of his blind trust on June 13 to sell all HCA stock. His trust accounts with a variety of stocks last year ranged from $7 million to $35 million, public records show.
Both the U.S. Attorney’s Office for southern New York and the Securities and Exchange Commission have asked HCA for records, the company disclosed Friday. The U.S. Attorney’s Office issued a subpoena, while the SEC made a phone request for the same records, HCA spokesman Jeff Prescott said.
Frist spokesman Bob Stevenson also disclosed that the SEC contacted the senator’s office about the sales. “The majority leader will provide the SEC any information that it needs with respect to this matter,” Stevenson said in a statement.
Frist’s staff earlier said he requested the divestiture of all HCA stock because of periodic public complaints _ 19 written public complaints the past 10 years, according to Amy Call of Frist’s staff.
“Sen. Frist had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock,” Stevenson’s statement said.
Neither the SEC nor the U.S. Attorney’s Office would comment.
Frist’s assets are in what’s known as a qualified blind trust that does not tell him about specific stocks held by the trust manager. But Frist received approval by the Senate’s ethics committee to direct the trust to sell any remaining HCA stock, Call said, to end public criticism of any potential conflicts of interest. Frist could not set the date of the stock sale, she said.
Frist, a former transplant surgeon, is the son of the late Thomas Frist Sr., who also was a physician. The senior Frist and son Thomas Jr. in 1968 formed a hospital-management company, Hospital Corp. of America, which now is called HCA Inc.
Today, HCA manages about 190 hospitals and 80 outpatient-surgery centers in 23 states, England and Switzerland, according to its Web site.
Frist has been active in pushing health-care legislation the past decade while denying that he was doing anything to help his family’s HCA investments.
The Foundation for Taxpayer and Consumer Rights, based in Santa Monica, Calif., on Thursday asked the SEC to investigate the timing of Frist’s divestment of HCA stock because Frist’s brother, Thomas, is on HCA’s board, is its former chairman and HCA’s largest individual shareholder.
The HCA stock price closed at $55.76 on June 13, the day Frist dated a letter to his trust manager to sell any remaining HCA stock. The stock peaked at $58.22 June 22 and dropped 14.2 percent to $49.90 on July 13, the day that HCA released an estimate of quarterly earnings.
All HCA stock held by Frist was sold by July 1, and that of his wife and three sons by July 8, according to trust-fund letters among the Senate’s public records.
(Contact Richard Powelson at powelsonr(at)shns.com.)