A full SEC probe has been opened into Senator/Dr./Leader Frist's sale of stock two weeks before the price tumbled. This, in conjunction with the DeLay indictment, is shaping up to be a bad week for the 1994 GOP "Contract With America."
As a lawyer who defends companies for exactly the same thing that Frist is being investigated of, I can assure you that the SEC does not open up investigations willy-nilly. Frist may be exonerated in the end, but for the SEC to take this step means this is some serious stuff going on.
SEC Opens Full Probe Into Frist Stock Sale
By JONATHAN M. KATZ, Associated Press Writer
WASHINGTON - While insiders at HCA Inc. were selling millions of dollars of their own stock this year, they were also painting a sunny picture of the company's outlook for investors. Federal prosecutors and the Securities and Exchange Commission are investigating the sale of HCA stock by Senate Majority Leader Bill Frist, R-Tenn., whose family founded the company that grew into the nation's largest for-profit health care chain.
The SEC turned its initial inquiry into a formal investigation of the company, HCA announced Thursday. The company said it is cooperating with investigators.
Frist's office said Wednesday that he had gotten notice of a formal investigation, which grants subpoena powers to investigators to obtain information and documents.
On June 14, the day after Frist ordered his shares sold, HCA officers at a Goldman Sachs health care conference in Laguna Niguel, Calif., spoke optimistically about the company's prospects.
Victor Campbell, HCA's senior vice president of corporate communications and government relations, soothed investor concerns about unpaid patient debts and worries about patient volumes. He also advocated for a still-pending Senate bill that would limit the establishment of physician-owned specialty hospitals and called Washington "my favorite place ... where I spend at least a day or two a week."
In the month before the speech, Campbell sold about $12 million worth of stock. It was part of a massive insider sell-off at HCA that totaled some $112 million between January and June 2005.