Bill Frist makes a stock market killing

[Balta1701]

Man alive, I'm constantly amazed at how much luckier Members of the Senate are than the rest of us in the stock Market. I mean, what are the odds that Bill Frist would suddenly decide to sell all of his shares in the hospital company his family owns, right before the stock price tumbled 15%? He must have a Rally Crede giving him stock tips.

 

Senate Majority Leader Bill Frist, a potential presidential candidate in 2008, sold all his stock in his family's hospital corporation about two weeks before it issued a disappointing earnings report and the price fell nearly 15 percent.

 

Frist held an undisclosed amount of stock in Hospital Corporation of America, based in Nashville, Tenn., the nation's largest for-profit hospital chain. On June 13, he instructed the trustee managing the assets to sell his HCA shares and those of his wife and children, said Amy Call, a spokeswoman for Frist.

 

Frist's shares were sold by July 1 and those of his wife and children by July 8, Call said. The trustee decided when to sell the shares, and the Tennessee Republican had no control over the exact time they were sold, she said.

 

HCA shares peaked at midyear, climbing to $58.22 a share on June 22. After slipping slightly for two weeks, the price fell to $49.90 on July 13 after the company announced its quarterly earnings would not meet analysts' expectations. On Tuesday, the shares closed at $48.76.

 

The value of Frist's stock at the time of the sale was not disclosed. Earlier this year, he reported holding blind trusts valued at $7 million to $35 million.

 

Blind trusts are used to avoid conflicts of interest. Assets are turned over to a trustee who manages them without divulging any purchases or sales and reports only the total value and income earned to the owner.

 

To keep the trust blind, Frist was not allowed to know how much HCA stock he owned, Call said, but he was allowed to ask for all of it to be sold.

 

Frist, a surgeon first elected to the Senate in 1994, had been criticized for maintaining the holdings while dealing with legislation affecting the medical industry and managed care. Call said the Senate Ethics Committee has found nothing wrong with Frist's holdings in the company in a blind trust.

 

"To avoid any appearance of a conflict of interest Senator Frist went beyond what ethics requires and sold the stock," Call said. Asked why he had never done so before, she said, "I don't know that he's been worried about it in the past."

 

An HCA spokesman said the company had no part in Frist's decision.

[FlaSoxxJim]

Sounds more like a Rally Martha. Maybe he'll be looking at monkeybars in a little while?

[Middle Buffalo]

What, a guy can't get lucky and time the market right every so often?

[mreye]

Blind trusts are used to avoid conflicts of interest. Assets are turned over to a trustee who manages them without divulging any purchases or sales and reports only the total value and income earned to the owner.

 

To keep the trust blind, Frist was not allowed to know how much HCA stock he owned, Call said, but he was allowed to ask for all of it to be sold.

[FlaSoxxJim]

Blind trusts are used to avoid conflicts of interest. Assets are turned over to a trustee who manages them without divulging any purchases or sales and reports only the total value and income earned to the owner.

 

To keep the trust blind, Frist was not allowed to know how much HCA stock he owned, Call said, but he was allowed to ask for all of it to be sold.

 

And that probably works just swell – IF YOUR FAMILY DOESN'T OWN THE COMPANY!

 

The timing of the sale, two weeks before the shares tumbled, is suspicious. None of the blind trust provisions cited above do anything to assure that priveleged information was not used in the decision to sell off all his shares when hhe did.

[southsider2k5]

What is the quickest way to get a million dollars in the stock market?

 

 

Start with two million.

[mreye]

The timing of the sale, two weeks before the shares tumbled, is suspicious.  None of the blind trust provisions cited above do anything to assure that priveleged information was not used in the decision to sell off all his shares when hhe did.

Ahhh... the timing. Yes, but I guess it doesn't matter that it really wasn't 2 weeks. It was a month after the sell order was placed.

 

On June 13, he instructed the trustee managing the assets to sell his HCA shares and those of his wife and children, said Amy Call, a spokeswoman for Frist.

 

...the price fell to $49.90 on July 13 after the company announced its quarterly earnings would not meet analysts' expectations.

[FlaSoxxJim]

Suggesting that he may have known for some time that quarterly numbers were going to be off. At least there is the perception it's possible. It's harder to sell the 'he didn't want any appearance of impropriety (sp?)' line when he authorized the sale of all of his wife and childrens' shares as well as his own.

 

Don't get me wrong. There are plenty of good, non-insider deal reasons for selling off stock in a family business. Fritz Maytag (of Maytag washing machine family fame) comes to mind, of course. :drink

 

(And only Gleason will get that oblique reference.)

[Balta1701]

According to the WaPo, Bill Frist wasn't the only big name shareholder at this company dumping stock in the weeks before the earnings report came out. The SEC is refusing to say whether or not there is any sort of investigation in progress.

 

According to Thomson Financial, a reporting service, seven senior HCA executives sold 574,882 shares worth $19,942,610 between May 17 and June 10. A company spokesman, Jeff Prescott, said the executives are entitled "like other stockholders [to] make personal decisions . . . about when to sell." He said the executives complied with "blackout restrictions" imposed by the SEC to prevent dealing within a certain period prior to restatements of earnings.

 

An SEC spokesman said it is the commission's policy not to comment on investigations, and would neither confirm nor deny that it is probing insider trading at HCA.

[Balta1701]

Update, from the AP:

 

WASHINGTON (AP) -- When Senate Majority Leader Bill Frist asked a trustee to sell all his stock in his family's hospital corporation, a large-scale sell-off by HCA Inc. insiders was under way.

 

Shares of the Nashville, Tenn.-based hospital company were near a 52-week peak in June when Frist and HCA insiders were selling off their shares -- just about a month before the price dropped.

 

...

 

Under Senate ethics rules, senators can directly order the sale of any asset known to have been in the trust before the metaphorical curtain was drawn. The senator also can communicate in writing matters of concern, including ''an interest in maximizing income or long-term capital gain.''

 

That is not how blind trusts normally work, said David Becker, who was general counsel at the SEC from 2000 to 2002. To avoid potential insider-trading conflicts, the beneficiary usually has no knowledge or participation in investment decisions.

 

If Frist was allowed to ask for stock to be sold, ''the question here is, How blind is blind?'' Becker said.

In other words...simply following the current Senate Ethics rules would not necessarily prevent Frist from having been involved in an insider trading deal.

[Balta1701]

Insiders sold a whopping $100 million in that company's shares in the month before the stock price took the hit.

 

Senate Majority Leader Bill Frist's move to sell his remaining shares of HCA Inc. stock in June came at the tail end of at least a three-month period in which many of the company's top executives were cashing in long-term stock options for millions of dollars in profits.

 

A review by The Tennessean of stock transactions by HCA insiders between April 1 and June 30 shows the group as a whole sold nearly 1.8 million shares of stock worth nearly $100 million over that period. The data come from Securities and Exchange Commission filings used by Wall Street analysts to track whether executives are accumulating or selling shares in their own companies.

[southsider2k5]

Insiders sold a whopping $100 million in that company's shares in the month before the stock price took the hit.

 

Senate Majority Leader Bill Frist's move to sell his remaining shares of HCA Inc. stock in June came at the tail end of at least a three-month period in which many of the company's top executives were cashing in long-term stock options for millions of dollars in profits.

 

Bold is the key phrase in that statement. The timing makes it a lot less suspicious. If he had led the insiders in selling that is one thing, but if he was at the tail end of all of that, not only to numbers get released showing insider buying/selling, but also rumors get out about heaving selling/buying done by insiders. You kind find those numbers as public filings at the SEC, and are often posted in segments on CNBC. Trust me, you can't keep a secret on Wall Street, and if it took him 2-3 months to act while insiders were selling, all that means is that Frist is a piss poor trader, and not an insider trader.

[Balta1701]

AP: subpoena's issued.

 

"Hospital operator HCA (HCA) said Friday that federal prosecutors have issued a subpoena for documents the company believes may be related to the sale of its stock by Senate Majority Leader Bill Frist. A release from the company said the subpoena came from the U.S. attorney for the Southern District of New York."

[kapkomet]

Bold is the key phrase in that statement.  The timing makes it a lot less suspicious.  If he had led the insiders in selling that is one thing, but if he was at the tail end of all of that, not only to numbers get released showing insider buying/selling, but also rumors get out about heaving selling/buying done by insiders.  You kind find those numbers as public filings at the SEC, and are often posted in segments on CNBC.  Trust me, you can't keep a secret on Wall Street, and if it took him 2-3 months to act while insiders were selling, all that means is that Frist is a piss poor trader, and not an insider trader.

Oh STOP IT. Keep letting the sharks swim here to throw the blood in the water, because it sounds so good.

 

Since when did logic and common sense belong in this forum?

[southsider2k5]

Oh STOP IT.  Keep letting the sharks swim here to throw the blood in the water, because it sounds so good.

 

Since when did logic and common sense belong in this forum?

 

I also forgot to mention that block trades (individual trades that account for a certian % of a stocks float) are made public after every trading day as well. This is another way that traders use to piece together insider buying/selling as well as things like hostile takeovers etc.

 

If that article about Frist not selling to the end is true, all of this is another witchhunt. It all comes down to the timing of the deals. If he was the first or one of the first to dump, he probably was acting on insider info. If he was on the end, he is a dumbass and a bad trader, risking the markets getting wind of things before he can get out of his position.

[Balta1701]

Newest Update:

 

Federal prosecutors and the Securities and Exchange Commission have opened investigations of Senate Majority Leader Bill Frist's sales of stock in a hospital operating company founded by his family. Documents show Frist was updated several times about his investments in HCA Inc. and other transactions even though they were held in blind trusts.

 

Despite the updates, Frist insisted in public statements afterward that he didn't know what was in the trusts, specifically denying knowledge of his HCA holdings.

 

Nashville, Tenn.-based HCA said Friday it had received a subpoena from prosecutors for the Southern District of New York, asking for documents the company believes are related to Frist's stock sale.

 

Prosecutors also have contacted the senator's office, Frist spokesman Bob Stevenson said. He said neither the senator nor his office had received a subpoena.

[FlaSoxxJim]

Apparently some blind trusts are less blind than others.

[Balta1701]

The entertainment value of this thread for me just keeps growing and growing.

 

Bill Frist is now Facing 2 separate investigations.

 

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., received regular updates of transfers of assets to his blind trusts and sales of assets. He also was able to initiate a stock sale of a hospital chain founded by his family with perfect timing. Shortly after the sale this summer, the stock price dived.

 

A possible presidential contender in 2008, Frist now faces dual investigations by the U.S. attorney for the Southern District of New York and the Securities and Exchange Commission into his stock sales.

 

Sheldon Cohen, who was the trustee for Democrat Walter Mondale’s blind trust when he was vice president, and drafted Democrat Lyndon Johnson’s blind trust for Johnson’s presidency, said that in the executive branch,“You don’t tell them how it’s composed.” He said Frist, like any federal official, “absolves himself of conflict by not knowing what he owns.”

 

Cohen said that when Mondale left office, he told Cohen to sell his assets. “He had no idea what I was holding,” the Washington attorney and former Internal Revenue Service commissioner said....

 

Documents on file with the Senate show the trustees for Frist and his immediate family wrote the senator nearly two dozen times between 2001 and July 2005.

 

The documents list assets going into the account and assets sold. Some assets have a dollar range of the investment’s value and some list the number of shares.

[southsider2k5]

What is interesting is I have yet to see ANY articles talking about anyone charging the Trust company with a complete violation of their charter and ethics. It seems like everyone is so worried about nabbing the big fish that they are completely ignoring the biggest violators. Frist might have asked for the information, but a much bigger act is the company actually giving it to him.

[Texsox]

What is interesting is I have yet to see ANY articles talking about anyone charging the Trust company with a complete violation of their charter and ethics.  It seems like everyone is so worried about nabbing the big fish that they are completely ignoring the biggest violators.  Frist might have asked for the information, but a much bigger act is the company actually giving it to him.

 

Were any laws violated by the Trust Company in giving him the info? It seems that the burden is on Frist. The Trust company is violating ethical standards, Frist may have broken the law.

 

law>>ethics (although it would be nice if they were the same)

[southsider2k5]

Were any laws violated by the Trust Company in giving him the info? It seems that the burden is on Frist. The Trust company is violating ethical standards, Frist may have broken the law.

 

law>>ethics (although it would be nice if they were the same)

 

I don't think requesting info into a blind trust would be nearly as big of a legal problem as a company who trades blind trusts, giving one trader an advantage over the rest of their customers. They had the same type of problems a couple of years ago with certian mutal fund traders getting to trade after hours, while regular guys were not able to, and they paid fines in the $100 million+ range for it. This amounts to the samething, with certian people getting an illegal advantage over someone else, but doing something that is expressly forbidden in the type of account they have, but only because the trust company was willing to give it to them. If Frist had requested information, and the trust had refused to give it to them, this would have never happened.

 

This is actually remarkably similar to Hillary's insider trading at the MERC that got poo-pooped under by Janet Reno as well.

[Texsox]

This is way out of my knowledge area, so permit me to ask a couple questions. The purpose of a blind trust is to negate the possibility of the Senator having an unfair advantage in the market, because of possible laws that may be enacted or investigations he would be privy to. The Trust company is then protecting the public from a potential abuse of power. Now I can see why they would have a legal and moral responsibility.

 

I am assuming that the trustees are allowed to use their knowledge to buy and sell holdings held in trust.

 

If I have read and understood this correctly, the owner of the trust is allowed to offer directions like "sell all my holdings in XYZ Corp.", because he knew he had them before his holding went into a blind trust. He would not be allowed to know how much he had at that moment, or the purchase price. He would not be allowed to order a purchase of XYZ Corp. because he would then know what was in his blind trust. Correct?

 

Another assumption is once a year he would see any gains or losses that would impact his income tax return. Correct? So at some point the veil is lifted?

 

Frist's violation would be in obtaining any insider information, not in directing the trustee to sell his stock. The trustee's violation would be in sharing with Frist the amount of stock he owned?

 

A key difference in the after hours trading is it allowed those traders to know results before making the transaction. Problems in Tokyo? Make a trade. Big, big difference. Having tomorrow's newspaper when investing is a big difference from knowing what you own and asking it be sold.

[southsider2k5]

This is way out of my knowledge area, so permit me to ask a couple questions. The purpose of a blind trust is to negate the possibility of the Senator having an unfair advantage in the market, because of possible laws that may be enacted or investigations he would be privy to. The Trust company is then protecting the public from a potential abuse of power. Now I can see why they would have a legal and moral responsibility.

 

I am assuming that the trustees are allowed to use their knowledge to buy and sell holdings held in trust.

 

If I have read and understood this correctly, the owner of the trust is allowed to offer directions like "sell all my holdings in XYZ Corp.", because he knew he had them before his holding went into a blind trust. He would not be allowed to know how much he had at that moment, or the purchase price. He would not be allowed to order a purchase of XYZ Corp. because he would then know what was in his blind trust. Correct?

 

Another assumption is once a year he would see any gains or losses that would impact his income tax return. Correct? So at some point the veil is lifted?

 

Frist's violation would be in obtaining any insider information, not in directing the trustee to sell his stock. The trustee's violation would be in sharing with Frist the amount of stock he owned?

 

A key difference in the after hours trading is it allowed those traders to know results before making the transaction. Problems in Tokyo? Make a trade. Big, big difference. Having tomorrow's newspaper when investing is a big difference from knowing what you own and asking it be sold.

 

Trusts are supposed to go a level beyond that even. I don't think anyone is supposed to have knowledge of what they own in trust, but I am not sure how it works for a family holding. Most blind trusts don't allow ANY knowledge of what they own, just for the conflict of interest reason. That is why Cheney liquidated his Haliburton position before assuming VP. As I understand blind trusts they are to be completely independant of any influence by the owner. That's what makes it a blind trust. There are regular trust accounts for those who want info and influence.

[NUKE_CLEVELAND]

Were any laws violated by the Trust Company in giving him the info? It seems that the burden is on Frist. The Trust company is violating ethical standards, Frist may have broken the law.

 

law>>ethics (although it would be nice if they were the same)

 

 

Since when is the burden of proof on the accused...............

 

 

Just curious about what you armchair constitutional scholars think about that since you're so eager to extend that courtesy to rapists and murderers.

[Texsox]

Trusts are supposed to go a level beyond that even.  I don't think anyone is supposed to have knowledge of what they own in trust, but I am not sure how it works for a family holding.  Most blind trusts don't allow ANY knowledge of what they own, just for the conflict of interest reason.  That is why Cheney liquidated his Haliburton position before assuming VP.  As I understand blind trusts they are to be completely independent of any influence by the owner.  That's what makes it a blind trust.  There are regular trust accounts for those who want info and influence.

 

But earlier in this thread someone quoted a source that the Senator is allowed some direction in his assets. Like directing the sale or asking for long term v. short term goals, etc.. Because the trust would be set up to conform with the Senate ethics laws, not SEC laws, it would have to conform to the ethical guidelines that Frist is under. From reading your comments, I think we both would agree that these ethics laws need strengthening if Frist is allowed to direct a liquidation of a holding.