On September 21st, the Washington Post reported that Senate Majority Leader Bill Frist (R-TN) 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.”
The Chronicle‘s editorial board must have run out of “in the aftermath of” and “in the wake of” Katrina and Rita editorials because almost two weeks after the Post‘s story, the financial/legal experts at the Chronicle have decided to compare Sen. Frist to…Martha Stewart:
Frist sold all his stock in Hospital Corporation of America shortly before the company, founded by his father and brother, issued a negative earnings report. The stock dropped 9 percent of its value. Frist’s sale followed similar unloading of big blocks of company stock by HCA officials, including chairman Jack Bovender and Treasurer David Anderson. All the while, in behavior reminiscent of Enron executives, HCA officers publicly hyped the health of the nation’s largest for-profit hospital chain to market analysts and fellow stockholders.
The investigation of Frist calls to mind that of homemaking maven Martha Stewart, convicted and jailed for lying to investigators about an insider tip she received from a stockbroker that allowed her to unload $45,000 in Imclone stock before its value plummeted. By contrast, Frist’s HCA holdings were worth approximately $10 million of the value of the not-so-blind trust he created when he took office.
Since the editorial board has a long history of dubious thinking, getting basic facts wrong, and even making up new treaties and laws, I think it’s best not to take the idealist’s word as the final say on Sen. Frist’s guilt or innocence. Instead, here’s what Sen. Frist says happened:
When deciding how to handle my family’s personal investments, I always sought expert advice and Senate Ethics Committee review and approval. Despite not being required to do so, I sought and obtained two Ethics Committee opinions acknowledging that my ownership of HCA stock complied with Senate rules and did not present a conflict of interest with my Senate duties. Despite not being required to do so, I later chose to place many of my investments in blind trusts, including my HCA stock. With these efforts, I have sought to guarantee that no conflict of interest existed. Review after review has found nothing wrong. Nevertheless, the complaints and questions have persisted.
Because of these continuing questions, and looking ahead at my final years in the Senate and what might come next, I have for some time wanted to eliminate even the possibility of an appearance of a conflict by totally divesting of any HCA stock in my family’s trusts.
In April, I asked my staff to determine if Senate rules and relevant laws would allow me to direct the trustees to sell any remaining HCA stock. After my staff reviewed relevant statutes and Senate rules and consulted with outside counsel and Senate Ethics Committee staff, I learned that the rules allowed me to direct the trustees to sell any remaining HCA stock in my blind trusts.
In May, my staff worked with outside counsel and the Senate Ethics Committee staff to draft a written communication to the trustees. After obtaining pre-approval by mid-June from the Senate Ethics Committee, I issued a letter directing my trustees to sell any remaining HCA stock in my family’s trusts.
Now I am being asked to explain this decision. I understand that. And I welcome it.
An examination of the facts will demonstrate that I acted properly. I will cooperate with the Securities and Exchange Commission (SEC) and the U.S. Attorney for the Southern District of New York to provide the information they need as quickly as possible. My only objective in selling the stock was to eliminate the appearance of a conflict of interest. I had no information about HCA or its performance that was not publicly available when I directed the trustees to sell the stock.
So, perhaps we should wait until the SEC and the U.S. Attorney finish their investigations.
This reminds me of the Democrat/media (one and the same usually, I know) outrage when then-Governor Bush chose Dick Cheney as his running mate. There was outrage and horror that the guy who used to head up Halliburton could be VP. There were screams that Cheney MUST divest himself of any ties to Halliburton. So Cheney sold his stock. Then there was Democrat/media outrage that Cheney had made money by selling his Halliburton stock. Well, duh!
This caps off today’s editorial:
In the end, Frist may be guilty of nothing more than bad judgment in putting his financial interests above the public trust and his political future.
Really? Where is the editorial on N.J. Sen. Jon Corzine (D-N.J.), who is running for N.J. governor? Check out this paragraph from a Gannett News Service story:
He’s gotten into hot water this year over unfulfilled promises to create a blind trust and for a nearly half-million-dollar gift he made to former girlfriend Carla Katz, a powerful state union chief. And on Thursday, The Record of Hackensack reported that Corzine, as a member of the Foreign Relations Committee, voted last year for a tax treaty with Japan that netted him a significant tax break.
Good grief!
