SEC & Dept. of Justice Open Investigation Into Possible Insider Trading Involving U.S. Senate Leader
Santa Monica, CA — Congressional leaders must appoint an independent observer who reports directly to Congress to ensure a through, transparent investigation of Senator Frist’s HCA stock sale, currently under investigation by the Securities and Exchange Commission (SEC) and Department of Justice, said the Foundation for Taxpayer and Consumer Rights (FTCR) in a letter sent to Senator Reid, Speaker Hastert and Minority Leader Pelosi today. FTCR called on the SEC to open the investigation into possible insider trading involving Senator Frist and his brother Thomas, an HCA director and insider, on Wednesday.
“It cannot be ignored that Senator Frist is the second-most powerful Republican in the nation and Republican-controlled agencies are conducting the investigation. Partisan investigators could simply ask the Frist family whether they shared insider information and wrap up their inquiry. We are encouraged by the quick response by the SEC and Department of Justice, but believe that an independent observer is necessary in order to ensure a nonpartisan and thorough investigation. We urge you to appoint an outside advisor who will maintain transparency and report to Congress and the public on the progress of the inquiry,” wrote FTCR.
HCA insiders, including the President, a Sr. Vice President and Officers of the company sold $112 million, or 2.3 million shares, this year according to the Associated Press. Frist directed his trust manager to sell all of his and his immediate family’s HCA stock in the middle of June as the market value of HCA stock was peaking. Frist was notified his family stock was sold on July 1 and 8; the stock’s value fell precipitously just 5 days later after the announcement of earnings that failed to meet expectations.
“For years, we have urged the Senator to recuse himself from legislative matters that would financially benefit HCA because of his extensive holdings in that company. And for years Frist resisted, arguing that no conflict existed. His sudden change of heart is difficult to believe, and his newfound ethical concern may in fact cover up a much greater breach of trust. We expect you will do everything in your power to ensure a thorough investigation that stays above the political fray,” concluded the letter.
The Foundation for Taxpayer and Consumer Rights (FTCR) filed an ethics complaint last April asking the U.S. Senate Ethics Committee to investigate Senator Frist for a conflict of interest in his advocacy of medical malpractice liability limits that would financially benefit HCA, which also owns the nation’s fourth largest malpractice insurer.
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