SEC asked to review Frist stock divestiture

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Consumer group wonders if senator had inside info before asking blind trust to sell shares

Knoxville News-Sentinel

WASHINGTON, DC — A national consumer group Thursday urged the Securities and Exchange Commission to investigate whether Senate Majority Leader Bill Frist had insider information when he decided to sell all his HCA stock before a quarterly earnings report that depressed the stock value.

The Foundation for Taxpayer and Consumer Rights wrote to the SEC after news accounts of public records in the Senate showed that Frist, R-Tenn., wrote June 13 to his qualified blind trust asking his manager to divest any remaining shares in the Nashville-based company that his father founded in the 1960s.

Before 2000, the year that his stock was placed in a qualified blind trust, Frist held millions of dollars of shares in HCA, which owns hospitals, surgery centers and is a major malpractice insurer.

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.

Frist’s brother, Thomas, is former chairman of HCA and remains on its board of directors, and Thomas Frist is the company’s largest individual shareholder. An HCA spokesman said the company was unaware earlier that Bill Frist told his trust to sell all his HCA stock last summer.

But Frist had no control over the date the stock would be sold, his spokesperson, Amy Call, said Wednesday. The trust manager did not disclose the date of the sale nor the number of shares sold or the amount of the sale, she said.

The trust manager wrote Frist in letters dated July 1 and July 8 that his and his wife and sons’ HCA shares had been sold at some point since his June 13 order. Since the July 13 earnings report, HCA’s stock price has closed at $45 to $50 per share.

Frist’s spokesperson, Amy Call, earlier said that Frist sold the shares to end periodic criticism of potential conflicts of interest in his health-care initiatives since first taking office in 1995.

She declined to comment Thursday on the organization’s request for an SEC investigation.

But Call clarified that Frist’s office since 1995 had counted 19 written public complaints about potential conflicts between his HCA investments and Senate work. She said she was checking on the date of the most recent one.

SEC spokesman John Nester said the agency considers all tips or complaints, but never comments on whether it is doing an investigation unless there are charges.

FTCR, the consumer foundation, asked the SEC to check phone and financial records and other documents to determine whether Bill Frist received insider information from his brother or others at HCA before deciding to sell all his HCA stock.

However, public reports of Thomas Frist’s stock transactions, according to, show no large sales of his stock in the period that his brother’s trust was divesting any remaining HCA stock.
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