Group Seeks Further Inquiry in Frist's Stock Sales - New York Times

Group Seeks Further Inquiry in Frist's Stock Sales - New York Times


November 17, 2005
Group Seeks Further Inquiry in Frist's Stock Sales
By SHERYL GAY STOLBERG
WASHINGTON, Nov. 16 - A consumer advocacy group called Wednesday for the Securities and Exchange Commission to expand its inquiry into the stock trades of Senator Bill Frist, the Republican leader, saying it had uncovered "questionable transactions lucrative to Frist family members."
The commission is already investigating the senator's decision to sell all of his stock in HCA Inc., the healthcare giant founded by his father and brother, shortly before the price hit a peak and then plummeted. Mr. Frist, whose records, along with company's, have been subpoenaed, has repeatedly said that he has done nothing wrong.
Now the advocacy group, Public Citizen, says financial disclosure documents filed by Mr. Frist reveal several additional "exceedingly well-timed transactions" made by trusts that manage investments for his three sons. All involve healthcare companies that at one point had ties to the Frist family.
"We're not sure what this means," said Frank Clemente, director of Congress Watch, Public Citizen's government watchdog arm. But, he added, "It has the smell of the HCA stock trading, and we just thought it was important to bring this to light."
Public Citizen called for an additional investigation by the Senate Ethics Committee. Spokesmen for the ethics panel, the S.E.C. and Senator Frist declined comment.
Mr. Frist has placed his financial holdings, and those of his wife and sons, in a series of trusts that, under Senate rules, are managed by an outside agent who has only limited communications with the senator. The trusts are meant to help elected officials avoid conflicts of interest, or the appearance of them, and the senator, a Republican from Tennessee who had been widely expected to make a bid for the White House in 2008, has said his only purpose in selling the HCA stock was to eliminate any appearance of conflict.
He had long insisted that the main trust was a "blind trust" and that he had no control over it, but since the disclosure of this sale of HCA stock, Mr. Frist has acknowledged that the trust, as established, enabled him to direct its manager to sell off assets.
Public Citizen looked at stock transactions beyond HCA. It found that in September 2003, trusts in the name of the Mr. Frist's sons bought $300,000 to $750,000 worth of stock in American Retirement Corporation, a Brentwood, Tenn., company that offers services to the elderly, including assisted living and nursing home care. One of the founders of the company, established in 1978, was the senator's father, although the Frists no longer appear to have an interest in it.
Public Citizen found that in June 2005, at the same time the senator disposed of his HCA stock, the sons' trusts "reaped multimillion-dollar gains" by disposing of the American Retirement Corporation stock. The value had by then increased 367 percent, the group said, to anywhere from $1.4 million to $3.5 million.