Intermarkets' Privacy Policy
Support


Donate to Ace of Spades HQ!



Recent Entries
Absent Friends
Bandersnatch 2024
GnuBreed 2024
Captain Hate 2023
moon_over_vermont 2023
westminsterdogshow 2023
Ann Wilson(Empire1) 2022
Dave In Texas 2022
Jesse in D.C. 2022
OregonMuse 2022
redc1c4 2021
Tami 2021
Chavez the Hugo 2020
Ibguy 2020
Rickl 2019
Joffen 2014
AoSHQ Writers Group
A site for members of the Horde to post their stories seeking beta readers, editing help, brainstorming, and story ideas. Also to share links to potential publishing outlets, writing help sites, and videos posting tips to get published. Contact OrangeEnt for info:
maildrop62 at proton dot me
Cutting The Cord And Email Security
Moron Meet-Ups






















« The Dog, in Bible Speak | Main | Adolf Eichmann's Right-Hand Man Living In Syria »
September 25, 2005

Senator Frist and "Insider Trading." A Primer on This Week's Scandal

Senate Majority Leader Bill Frist is a rich guy. Besides making crazy cardiologist loot, he came from a rich family, valued at over a billion. His father, Thomas, helped found Hospital Corporation of America, a company that grew into what is now the nation’s largest chain of private hospitals. And as you might expect, Bill owned some HCA stock.

How much? Well that isn’t quite clear. In 1994 his HCA holdings were valued at $13 million. The next year he entered the Senate, and because he would be working on legislation that could impact the med. industry and therefore HCA, he did what Senators are supposed to do - he placed his HCA and other assets in a blind trust.

Now, I don’t know much about blind trusts. I sorta thought the whole point was that you would be, you know, blind to the assets once they went in. That your trust manager would give you some overall accounting as to the entirety’s worth, but you’d have no input into the purchase or sale of its constituent assets.

I hope I’d be excused as to this notion. The AP notes that Frist himself seemed to believe much the same when he explained in a television interview:

"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"

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."

(h/t Captain's Quarters)

Now it appears quite certain that Frist knew he still had HCA in his trust. It’s certain because, in June, he specifically directed his imposingly named trust fund manager, M. Kirk Scobey Jr., to sell it. All of it. And the BIG QUESTION is whether Frist was the beneficiary of “inside information” when he ordered the sale.


The background: For a long time HCA had been sort of floundering, been indicted for bad stuff in the past and the stock suffered as a result.

Around October 2004, though, things started to change. HCA began a long upward climb. By late June of 2005, it reached a peak of 56% more than its October value.

During the rise, HCA executives started selling off their personal holdings:

The sales, which included moves by [HCA's] chief executive, treasurer, senior vice president for government programs and several directors, were among the largest insider selloffs analysts had seen, LoPresti said. Many officers made their largest trades ever in April, only to top them again in May and June, LoPresti said

On July 13, 2005, HCA announced a sucky second quarter, with earning beneath the all important “analysts’ expectations.” Not surprisingly, the stock began a prompt tumble, quickly sliding 16% from its June 22, high. And it’s still down round there.

Were the executives making their previous decisions to sell based on insider knowledge that the second quarter was going to be off, knowledge that wasn’t publicly available until July 13?

Tigerhawk runs a detailed analysis of the stock’s movements, and notes that exectives always have a sense of where their company is headed, how it’s currently doing, even if they don’t have prior access to hard figures/info that non-insiders don’t.

Maybe the executives were ‘insider trading.’ Maybe they weren’t. I don’t know. That’s still not Frist’s real concern though.

This is: On June 13th, near the stock’s June 22nd high, and the tail end of the exec’s mass sell off, Frist contacts Scobey, and says “Scobey, sell all my HCA. Mine and my wife’s”

Now Frist, because it’s a blind trust, can’t control the exact timing of the sale, but his trust manager gets around to it, dumping Frist’s personal shares on July 1, and Frist’s wife’s on July 8 - the last sale, coming just one week before the bad earnings announcement and the stock’s fall.

So you see the big question, don’t you? What prompted Frist to sell all his HCA? Did he get a tip from an HCA exec with inside info? Or, put more legalistically, did Frist have material nonpublic information regarding HCA at the time he ordered the sale.

Frist’s office issued a statement saying he was only trying to avoid a confilct of interest. Others point out the curious nature of that excuse:

"Frist has been in the Senate for many years now, and the conflict is not new," said Melanie Sloan, executive director of the watchdog group, Citizens for Responsibility and Ethics in Washington. "Why did he decide to sell it then? Why not years ago? What's changed? Did he know that the stock was about to take a fall?"

The usual crowd, not surprisingly, think the facts, facially, convict the majority leader and the Republican party:

Democrats were quick to pounce on Frist's problem. Democratic National Committee Chairman Howard Dean urged the agencies involved to "fully and vigorously investigate Frist's suspicious stock trade." He added: "Republicans in Washington have made their culture of corruption the norm."
"Bill Frist has this all upside down," said Rep. Rahm Emanuel (D-Ill.), chairman of the House Democrats' campaign committee. "He thought Terri Schiavo could see and his trust was blind."

Federal agencies are looking into the matter:

A spokesman said Frist's office has been contacted by both the SEC and the U.S. attorney's office in Manhattan about his divestiture of the stock. HCA disclosed separately that it was subpoenaed by the same U.S. attorney's office for documents that were related to Frist's sale. Frist and HCA said they are cooperating.


I don’t know what Frist was up to. I’d like to think the guy’s smarter than Martha Stewart and knew that a Senate Majority Leader reaching into a ‘blind trust’ and directing the sale of specific assets that are about to take a plunge is gonna raise eyebrows. (And what’s up with ‘Blind Trusts.’ Is it really copacetic to micromanage like that? What's the point of a blind trust then?)

Really, people buy and sell stock all the time. (For real. There are people called brokers who actually make a living off it) And I believe Frist had some prior campaign loans that needed repaying, and hey, why not sell HCA? The thing had been lagging for a long time. Getting a pretty good price for it now. With second quarter earnings coming out, why take a risk? Why not lock up some gains?

Well why not just say that? Why the lame ‘avoid the appearance of impropriety’ excuse?

Anyway, we’re gonna be hearing a lot about it, as intrinsically technical and boring as it is. Frist wants the republican nomination in ‘08 and this, depending on how it breaks, could take him out. Even if he’s clean, he doesn’t need ‘Mr. and Mrs. Swing-Vote’ learning his name in the context of scandal allegations.

Somewhere, a former Senate Majority leader is chuckling himself silly.

digg this
posted by Dr. Reo Symes at 04:55 PM

| Access Comments




Recent Comments
Commissar Hrothgar (hOUT3) ~ Next year in Corsicana - again! ~ [/i][/b][/u][/s]: "Twasn't me that now has an appointment with the ba ..."

Braenyard - some absent friends are more equal than others: "His daddy was a pistol and he was a son of a gun. ..."

Tonypete: "[/i] Good evening Italicans! ..."

Commissar Hrothgar (hOUT3) ~ Next year in Corsicana - again! ~ [/i][/b][/u][/s]: "Argggh! [/i] ..."

Pug Mahon, Pledge in a Beanie: "The chill I just felt was knowing that I am LAST! ..."

Commissar Hrothgar (hOUT3) ~ Next year in Corsicana - again! ~ [/i][/b][/u][/s]: "Nice one TRex! ..."

AlaBAMA DeButts: "Italican noods ..."

JohnFNotKerry: "italics ..."

mindful webworker - so they say: "Overnight thread, overnight thread Pops up when I ..."

AlaBAMA DeButts: "Egads! Italicans! ..."

JohnFNotKerry: "wow 5th ..."

Pug Mahon, Pledge in a Beanie: " Doof! Howdy, amigo. Posted by: Notorious BFD at ..."

Recent Entries
Search


Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
Powered by
Movable Type 2.64