Redstate

but this does not pass the smell test.  How long did he own this stock before selling it right before a major decline?  If this was an ethics issue, it could have been taken care of years ago.  This is very similar to the Martha Stewart case and may very well play out the same way.

1. Frist wants to run for President. That's a different level of preparation.
   
2. He started this process in APRIL.

A key issue for securities law is this:

"I had no information about HCA or its performance that was not publicly available when I directed the trustees to sell the stock."

Another unstated issue is whether he had some reason to believe that hospital or medical stocks in general were likely to decline in the near term.

And, was the trust really blind: did he have any real knowledge of what it contained?

While I may believe him, I suspect this will not go away as an issue.  The media will accuse him of knowing something . . . and he cannot prove a negative.

As for Martha, she was unfairly twisted by the media.  Heck, she called her broker and left messagaes asking for inside information . . . but I never heard any evidence that she ever received it.

. . . , then, is with the Senate Ethics Committee, unless Frist has been stupid enough to lie through his teeth about their involvement.

Perhaps the aroma you have detected emanates from your dead donkey. RIP.

. . . on securities-related charges. She was found guilty of impeding the investigation.

why April is a relevant timeframe, Krempansky.  

If Senator Frist sold his stock based on information obtained via family channels about the future of HCA then he most likely violated SEC laws.  

If the Senator sold his stock based on information he obtained as a Senator then he most likely violated Senate ethics rules.

I don't know if he did either of these things.  But just because he initiated this back in April doesn't really mean much to me.  

He answered the question about blind trust in his statement.

Despite not being required to do so, I later chose to place many of my investments in blind trusts, including my HCA stock.

So he knew that the HCA stock was in his blind trust at one point.  It was possible that the trustees hadn't sold them, it was possible that they bought more.  As he started his plans to run for POTUS (shudder), he decided to make sure that he didn't, in fact, own any of that stock, even in a blind trust.

So he started the process of getting rid of that stock, if indeed he still had any, in April.  

I find it very difficult to believe that there was any insider information he could have been privvy to in April that didn't effect the stock price of the company until July.  But that's what the SEC investigation will have to examine.

You're right that he will never be able to prove the negative, so he's being quite unfairly smeared.  But politics is a contact sport and if you want to be POTUS (again shudder at the thought of him doing so) you have to be prepared for the nasty stuff.

I share the contention that if his statement is true (and the April date should be easily verifiable) then this matter should not be part of any rationale to ask him to step down as Majority Leader.  

Of course, IMHO, there's about 5 dozen other reasons to ask him to step down anyway...

While not impossible, it's unusual to be able to take advantage of material non-public information over a time frame that stretches for several months.  It's an atypical situation to know that your company is going to have bad news 3 or 6 months from now.

Different markets have different forecasting models.    Also it is entirely possible that market conditions allowed HCA to sustain it's market value longer than expected.  Gary Winnick sold millions of shares of Global Crossing when he knew it was going to crash.

I will agree that the longer the timeframe the less likely he had any sort of illicit information. But I certainly don't believe that this exonnerates the Senator.  

FTR, I haven't looked at the financials of HCA and I really have little interest in doing so.  I generally don't care much about personal scandal stuff like this.

The stock had shot up months earlier.  Even aside from the political timing it made sense to start getting out.  And lots of people were selling.

Frist says he had no inside information, and he can presumably prove that he spent months on the process of selling.  Until someone shows some evidence that he actually had material nonpublic information, this is a lot of nothing.

Another unstated issue is whether he had some reason to believe that hospital or medical stocks in general were likely to decline in the near term.

You mean, some nonpublic information, and something more specific than an ability to estimate which way the wind was blowing on Capitol Hill.  Senators are allowed to put two and two together like the rest of us.

Come on, at least be honest.

"FTR, I haven't looked at the financials of HCA and I really have little interest in doing so.  I generally don't care much about personal scandal stuff like this."

No, you have a lot of interest in this sort of thing - hell, if it were insider trading, you'd tag - and RIGHTLY SO - a Republican leader. You just don't have any interest in looking closely at something that might actually prove that Frist is an honorable man.

I think the timing is quite important.  He initiated this in April when their stock was at a pretty good price.  It looks like on April 1, the price was $53.49   On July 1 it was $56.25.  So a difference of $3 a share.  Today it's trading at $48 per share.  A difference from April to now of $6 bucks a share

It's not like Global Crossing where the stock plummeted to being valueless and everyone was going to take a bath.  So while frist may have taken a small (to him, he's rich) loss, it's not like he was avoiding some massive loss.

And I don't think it's all that uncommon for folks to sell stock when it's at a 52-week high.  Especially when he's been criticized his whole political career for owning that stock in the first place and the fool thinks he can run for President.

Frist wants to run for President. That's a different level of preparation.

I don't think the general public relates to him very well.  I would have to say at this point he won't survive the primaries if he chooses to run.  He'll need a lot of coaching.

He started this process in APRIL.

Well, he had to start it sometime.  But that doesn't preclude him from getting insider information in any way, now does it?

Maybe he started in April and it was just bad timing in July.  Or maybe he started in April and sold because of insider information in July.  April doesn't really help much.

No one really knows, but it looks suspicious, so there's an investigation.

By all means, hold an investigation.  But my first instinct is that Professor Bainbridge (who is an expert in this area) is right:  This is much ado about nothing.  (see http://www.professorbainbridge.com/2005/09/frists_trades.html)

All I can say is that I haven't said boo about him being guilty.  The harshest criticism I have made to date is that the SEC will figure this thing out and if he did something they will handle it.

I'm not into partisan mud fights.  I prefer policy discussions.  If you read the bulk of my comments you will see that.  

but that is not what he says, at all.  He's discussing an academic issue that is a rather fine point in the law, and it may or may not even apply here.

That's when the stock shot up.

But honestly, that's the least of the reasons to get rid of Frist.

It's not like he was trading cattle futures ...

If he is telling the truth this is totally different from the MS case. Time will tell, but I think this is going nowhere.

He held the stock for many years, by the way.

Tigerhawk's comment in particular; unless there's a smoking gun (i.e., an e-mail referencing or attaching material nonpublic information that's appropriately dated), my sense is that the SEC is going to have a huge problem prosecuting this one.

But, again, this isn't my area; so take the above impressions fwiw.  

Also see the Baseball Crank (http://baseballcrank.com/archives2/2005/09/law_selling_hca.php), who points out that even if my hypothetical smoking gun existed, it still probably ain't enough to prove a violation of the law.

IOW, those who know better than I all suggest that this is much ado about nothing.  Expect the Democrats to play the story for maximum political effect, however.*

von

*And, on that note, an aside to those who have legitimate beefs with Frist:  Despite your misgivings about his leadership, it is not a good idea to let him twist in the wind on a seemingly BS charge.  Unless, that is, you'd like to give the Democrats another opportunity to tar Republicans as generally corrupt.  Remember:  at a certain level, an attack against the Republican leadership harms Republicans generally. (This is not to say the leadership shouldn't be confronted where they've gone idiotic:  e.g., Tom DeLay.)

I read somewhere that many of the insiders sold at the same time, ????

they are guilty in the media until proven innocent, and then they usually are still guilty after being proven innocent.

When a Democrat get investigated, if ever, it gets ignored by the media, unless it is something really egregious, like being suspected of being involved in the disappearance of the young staffer he's been having sex with.

Where is the reporting on the investigation of Senator Schumer and his felonious aides who illegally obtained credit reports on Lt. Gov. Steele of Maryland?

Where is the reporting on Congressman William Jefferson (D-LA), who is being investigated by the FBI for public corruption? To be frank, I never even heard of this guy until I read - on blogs - about him commandeering a military truck in New Orleans, while people were still stranded, on the premise of "touring the damaged areas", to go to his own house to remove two large boxes of personal belongings and a laptop. (I wonder if there was anything in those boxes that he didn't want in the hands of the FBI.) The truck got stuck in Jefferson's front yard, and another rescue truck had to be diverted to rescue the first truck.

If Schumer and Jefferson were Republicans, these stories would be plastered al over CNN and the alphabet network nightly news for weeks. But they are Democrats, so we get stories about Senator Frist selling some stock, and the routine investgation that followed:

[W]hile they don't happen in every case, SEC investigations of trading in advance of big announcements - particularly by people, like Frist, who are related to management - are sufficiently routine that there's really no significance that should attributed to the existence of the investigation by itself.

No significance, that is, unless the subject of the investigation is a high level Republican target who can be pilloried for weeks in the media.

What happened when Newt Gingrich received an advance on a book? He got drummed out of the House. What happened when Madame Hillary received an advance on a book? The media gushed with anticipation, and gushed some more when the book came out.

As I understand it, the blind trust could've already sold 90% or 95% of the stock in question on their own initiative and their own timetable, without notifying Frist at all. Typically they only notified the stockholder after complete divestment--not a partial divestment. We may find out that Frist didn't even have much left to sell, even in April.

He should have worn a pretty pink outfit for the news conference explaining his sale.  Then the media would have dropped it.  Or at least it worked before for the other POTUS candidate.

Business Week reports that Frist has had, at best, a loose definition of "blind trust" for quite some time.

According to their reports, Frist received updates on changes in his portfolio on numerous occasions in 2002 and 2003 all the while stating that he was not allowed by law to know what his "blind" holdings were.

Frist, asked in a television interview in January 2003 whether he should sell his HCA stock [due to the possible appearance of a conflict on interest], 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" [Such tender regard for the viewers' understanding.]

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.

I don't like Senator Frist because he is an incompetent Majority Leadership. I am surprized by this apparent self-dealing. It's nice of MK to post the Senator's remarks in his own defense but a little disingenuous to leave it at that.

Two points regarding Frist's claim that he gave instructions in April to sell the stock:

1. I bet those were verbal instructions.
   
   
2. What stock did he want to sell since it was all held in a "blind" trust?

Self-dealing stinks to high heaven and should not be tolerated.

I don't like Frist either, but let's not condemn the man before all the facts come in.

A 'blind trust' is not as clear and simple as folks in the media seem to think.  When Frist put his stocks into the blind trust, he knew he had HCA stock, but the trustees had the authority and discretion to sell their stock at any point in time.

Annually, the trustees are required to send a report on the holdings of the blind trust and a performance report.  Just because you put your money in a blind trust doesn't mean you can get screwed by incompetent people or bad decisions.  So at least once a year you are given a report as to what is in the trust.  Now, the day after they send you the report they can sell all the stocks and buy different stocks.

Personally, I think Frist's statement while technically true was misleading and he should apologize for that.  But it's not criminal.

Additionally, Frist knew that he and his family (wife and kids) were going to get disbursements of HCA stock for one reason or another.  So he knew that another chunk of stock was coming in to the family's blind trust.

In April he claims he asked the Senate ethics folks about the process of verifying whether he still owned any HCA stock and whether he could order the trustees to sell it if they still had that stock.

That's a verifiable statement.  The ethics folks take meticulous notes of conversations, and Frist probably sent an email or sent a formal letter.  Either way, he can prove his timing without too much difficulty.

The fact that it took from April to July to get permission to sell the stock is not surprising, nor is it surprising that he thought of selling in april when the stock was at a near record high.  

When would you have him sell the stock, only when he can take a loss?

Senate Ethics Rules:

(v) an interested party shall not receive any report on the holdings and sources of income of the trust, except a report at the end of each calendar quarter with respect to the total cash value of the interest of the interested party in the trust or the net income or loss of the trust or any reports necessary to enable the interested party to complete an individual tax return required by law or to provide the information required by subsection (a)(1) of this section, but such report shall not identify any asset or holding;

(vii) the interested parties shall make no effort to obtain information with respect to the holdings of the trust, including obtaining a copy of any trust tax return filed or any information relating thereto except as otherwise provided in this subsection.

So I don't think you're correct that he gets periodic updates on the contents of the blind trust.

Republicans claim the high moral ground over the Democrats.  Because of that, they fall much more easily and much harder, and it's way better news.  The news loves a criminal, but a hypocritical criminal?  That's golden.

What else--big papers tend to be in big cities which tend to be left-leaning...

The Republicans are in power...

There are a lot of reasons for news bias.  We had a big thread about it a few weeks ago.

But it really doesn't matter what treatment the Democrats get.  If Frist did wrong, he should pay the appropriate price, correct?

Even if he's innocent, as you say, the scandal can ruin a politician.  This is a tough one.  But superficial scandal is a key ingredient in the  campaign playbooks of both major parties, and that's just the way it goes sometimes when you start thinking about running for President.

This is almost off topic, but barely maintains its grip on the subject of fair treatment in the press...

You guys should check out the "March of the Peaceniks" video on... sorry to say it... The Daily Show.  Even though many of you probably passionately hate the show, you will get a kick out of the first four minutes of this video.

It's too funny to not pass along.

If Frist did wrong, he should pay the appropriate price, correct?

Absolutely. But if he actually did no wrong, do you think the media will let up? I don't. The Democrats now have another talking point, soon to become a Known Fact™, regardless of the outcome.

And do you think the media will report on Ronnie Earle's long history of politically motivated bogus indictments of Texas Republicans? Don't hold your breath.