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SEC Demands Frist Stock Sale Details

October 14, 2005|From Reuters

WASHINGTON — Senate Majority Leader Bill Frist has been subpoenaed by the U.S. Securities and Exchange Commission to turn over records in a probe of possible insider trading, sources close to the case said Thursday.

Authorities are looking into Frist's recent sale of shares of hospital operator HCA Inc., co-founded by his family.

The sales were completed days before HCA's stock price fell sharply on a disappointing profit outlook.

Bob Stevenson, spokesman for the Tennessee Republican, said subpoenas were routine in SEC inquiries.

"Sen. Frist has been fully cooperating with the authorities conducting the inquiries and will continue to do so.... The issuance of a subpoena would be an expected and normal part of that process," Stevenson said in a statement.

An SEC spokesman declined to comment.

The subpoena came as questions swirled around Frist's management in recent years of his investments in HCA and other companies through a collection of blind trusts.

On Thursday, political watchdog group Common Cause urged the Senate ethics committee to investigate "whether Sen. Frist violated Senate ethics rules by directing trustees to sell stock held in a blind trust."

The subpoena was first reported by the Washington Post, the Wall Street Journal and the New York Times.

The Post, citing anonymous sources, said Frist was expected to testify under oath about what he knew about HCA's finances ahead of the stock sales.

Frist, viewed widely as a potential 2008 presidential candidate, said last month that he had no inside information about the coming profit forecast when he began taking steps in April that led to the stock sale completed on July 8.

"An examination of the facts will demonstrate that Sen. Frist acted properly," Stevenson said. "His only objective in selling the stock was to eliminate the appearance of a conflict of interest. He had no information about HCA or its financial performance that was not publicly available when he directed his trustees to sell the stock."

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