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Frist: "Oh, you mean THOSE stocks are a conflict of interest?"
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View this Thread in Original format
| MisterOpus1 |
Uh, yeah doc, those stocks:
| quote: | Posted on Tue, Oct. 11, 2005
AP: Frist accumulated stock outside trusts
LARRY MARGASAK and JONATHAN M. KATZ
Associated Press
WASHINGTON - Outside the blind trusts he created to avoid a conflict of interest, Senate Majority Leader Bill Frist earned tens of thousands of dollars from stock in a family-founded hospital chain largely controlled by his brother, documents show.
The Tennessee Republican, whose sale this summer of HCA Inc. stock is under federal investigation, has long maintained he could own HCA shares and still vote on health care legislation without a conflict because he had placed the stock in blind trusts approved by the Senate.
However, ethics experts say a partnership arrangement shown in documents obtained by The Associated Press raises serious doubts about whether the senator truly avoided a conflict.
In that case, the HCA stock was accumulated by a family investment partnership started by the senator's late parents and later overseen by his brother, Thomas Frist. The brother served as president of the partnership's management company and as a top officer of HCA. Sen. Frist holds no position with the company.
The senator's share of the partnership was placed in a Tennessee blind trust between 1998 and 2002 that was separate from those governed by Senate ethics rules. Frist reported Bowling Avenue Partners, made up mostly of non-public HCA stock, earned him $265,495 in dividends and other income over the four years.
Edmond M. Ianni, a former Wilmington, Del., bank executive who established blind trusts for corporate executives, questioned why the senator's brother was able to manage assets "when the whole purpose of a blind trust is to ensure lack of not only conflict of interest - but appearance of conflict of interest?"
Kathleen Clark, a government ethics expert at the Washington University in St. Louis School of Law, said she doesn't believe the Senate trusts or the Tennessee trust insulated Frist from a conflict because the senator or his brother were advised of transactions and could influence decisions.
"What I find most appalling is the Senate calls it a qualified blind trust when it's not blind," Clark said. "Since the Senate says it's OK, the Senate has made it a political question. It's up to the voter. But there's no doubt it's a conflict of interest."
Frist's interest in Bowling Avenue Partners and the Tennessee blind trust were listed on the annual disclosure reports he filed with the Senate. Thomas Frist's ability to influence HCA stock decisions in the partnership was detailed in separate trust and partnership documents obtained by the AP.
Those documents show Thomas Frist was listed as the "general partner" and "registered agent" of Bowling Avenue Partners. He also was listed as president of the partnership's management company.
Thomas Frist founded HCA, the nation's largest for-profit hospital chain, with his and the senator's father. He currently is the company's chairman emeritus.
Frist advisers confirmed the senator's brother could influence investment decisions in the Bowling Avenue partnership and said the partnership was placed in a Tennessee trust because Senate ethics rules didn't allow the non-public HCA shares to be included in Senate-approved trusts.
"His interests in the family partnership were not held by his Senate blind trusts because Senate rules did not permit it. Senator Frist did not control the assets in this partnership and he annually disclosed his interests to the public as required," Frist spokesman Bob Stevenson said.
Thomas Frist did not return repeated phone calls to his office at HCA seeking comment.
Bowling Avenue Partners' HCA shares became marketable securities when the estate of Frist's mother was settled in probate. Frist then began transferring those shares in stages from the Tennessee blind trust to the Senate-approved trusts in 2001 and 2002.
The value of all the transferred shares, calculated on the dates they went into the Senate trusts, was between $775,000 and $1.57 million, according to letters the trustees sent to Frist and the Senate. That stock was on top of millions of dollars in various investments Frist already owned in the Senate blind trusts.
With his background as a heart surgeon as well as majority leader, Frist has been at the forefront of legislation that would affect the hospital chain. Among the issues: a Medicare prescription drug benefit and limits on medical malpractice lawsuits.
Frist kept HCA stock in Bowling Avenue Partners and the Tennessee blind trust - but outside the Senate-approved trusts - between 1998 and 2002.
His investments in Nashville-based HCA are being investigated by federal prosecutors and the Securities and Exchange Commission after an AP report that the senator had asked administrators of his Senate blind trusts to sell his HCA holdings.
Frist ordered the stock sold June 13 and all sales were completed by July 1. HCA stock peaked on June 22 and then gradually declined. On July 13, it dropped 9 percent.
Reports to the SEC showed insiders sold about 2.3 million shares of HCA stock worth at least $112 million from January through June 2005.
Frist has denied having insider company information when he ordered the stock sold in June. The profit the senator made from the sales is not known.
The Bowling Avenue name came from the street of the Frist family home in Nashville.
http://www.miami.com/mld/miamiherald/news/12875498.htm |
Oopsie. Hey, get away from that curtain, Toto! Can't you see we need another terrorist threat like the one in New York?
(psst - that was complete bull, BTW: "New York subway alert ends, plot appears unfounded": http://today.reuters.com/investing/...RK-UPDATE-2.XML)
C'mon folks, can't we go back to scaremongering business as usual? If you vote Democrat, you vote with the terrorists, right? Nothing to see here, please disperse..... |
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| Shakka |
| quote: | | Sen. Frist holds no position with the company. |
Ya know, this really is turning into a witch hunt. |
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| Yoepus |
| quote: | Originally posted by Shakka
Ya know, this really is turning into a witch hunt. |
Good democratic strategy for 2006/2008 though if they are able to make the republicans look like the only corrupt ones in town.
Maybe we will see some "equal-opprotunity" corrpution investigations soon. just a hunch:clown: |
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| MisterOpus1 |
| quote: | Originally posted by Shakka
Ya know, this really is turning into a witch hunt. |
Well this particular case does not involve his so-called "blind" trust issue, which was about as blind as a ing eagle on crack. How he somehow miraculously pulled money out of his "blind trust" from his family owned businees along with other insiders weeks to months prior to the stock taking a descent hit cannot simply be dismissed as mere coincidence. It looks like , smells like , and squishes like underneath your shoe when you step in it, chances are it's probably which is exactly why the SEC is involved. If nothing comes about, so be it - I realize he's not the first guy to get away with something like this involving stocks. And there very well could be Dems. that have shown similar behavior in the stock market - Christ some of them I personally wouldn't mind getting rid of. But Frist is in power, so the focus is rightly pointed towards him and the people who are in power right now (GOP).
But like I said, this article is not focusing on that issue. Rather, this is more of a political issue in which Frist pretended that he had no conflict of interest by holding stocks in his brother's company that had a vested interest in the new Medicare bill that was passed. These stocks were outside those stocks he created to avoid a conflict of interest (and had such great timing in selling), thus making his whole story of avoiding such conflicts pure bull. I mean, Jesus, why the does it matter if Frist doesn't hold a position with the company? We're talking about his ing BROTHER FFS man - his family as well as his own personal finances. Are you actually being serious when you state something like that? Even his own advisors admitted to a conflict of interest:
| quote: | | Frist advisers confirmed the senator's brother could influence investment decisions in the Bowling Avenue partnership |
What else need be said?
| quote: | Originally posted by Yoepus
Good democratic strategy for 2006/2008 though if they are able to make the republicans look like the only corrupt ones in town.
Maybe we will see some "equal-opprotunity" corrpution investigations soon. just a hunch |
Well if you're curious about an actual Democratic strategy, here it is (via RollCall subscription only):
| quote: |
Seeing an opening to reach voters while Republicans are beset by turmoil, House Democrats are privately planning to accelerate the timing of the release of their platform and the major policies they will promote on the campaign trail next year.
Key Democratic sources say Minority Leader Nancy Pelosi (D-Calif.) and other House leaders are putting the finishing touches on what arguably will be Democrats most detailed "positive" election-year agenda since the party lost power more than a decade ago. Pelosi has been coordinating with Senate Minority Leader Harry Reid (D-Nev.), key Democratic strategists, advisers and outside interest groups on the policy platform as well as the party's broader 2006 message.
The move comes as many in the party have argued that Democrats need to do more than just complain of Republican excesses and the "culture of corruption" they charge the GOP with fostering.
An early draft of the agenda outlines the specific initiatives House Democrats will pledge to enact if given control of the House. Leaders have been working on the document for months, and have already started encouraging Members to unify around it and stick to its themes.
Among the proposals are: "real security" for America through stronger investments in U.S. armed forces and benchmarks for determining when to bring troops home from Iraq; affordable health insurance for all Americans; energy independence in 10 years; an economic package that includes an increase in the minimum wage and budget restrictions to end deficit spending; and universal college education through scholarships and grants as well as funding for the No Child Left Behind act.
Democrats will also promise to return ethical standards to Washington through bipartisan ethics oversight and tighter lobbying restrictions, increase assistance to Katrina disaster victims through Medicaid and housing vouchers, save Social Security from privatization and tighten pension laws.
One Democratic leadership aide said Democrats want to roll out their agenda this fall rather than early next year as leaders originally had planned. This aide suggested that the latest string of events -- from the Republican response to Hurricane Katrina, growing concern about the war in Iraq and mounting questions about GOP ethics -- made it clear Democrats must move quickly [...]
Members on both the left and right of the Caucus seem receptive to a detailed party outline to present to the public and hope party leaders can put something together this election year that will improve their electoral prospects.
But Rep. Artur Davis (D-Ala.), a leading centrist New Democrat, said no matter what detailed policies Democrats offer up this cycle, they must also make the broader case for why Republicans should no longer be in charge. He said all of the specific proposals will easily fit into that theme that Republicans "are out of touch."
"Democrats fell short in '02 and '04 because we didn't make a compelling case of how Republican policies have allowed American families to lose ground," he said. "We have to make that case." |
So yes, considering there is some serious ethically-challenged boobs running our country (into the ground, I might add), can you really blame Dems. for putting this on the forefront? Delay, Rove, Frist, Cunningham, Libby, Abramoff, Burns - the list is pretty extensive and quite attractive.
But if the Dems. regain control and leadership, I'm sure you'll have your GOP Limbaugh/Hannity/SmearBoat mouthpieces diggin' deep for "equal opportunity" corruption investigations at that time. Let's just hope they don't waste our ing country's time and money on an investigation that was originally about financial corruption and instead shifted entirely on partisan smearing with a conclusion of cum stains on a ing dress.;) |
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| Shakka |
http://online.wsj.com/article/SB112804195606856348.html
| quote: | Trusting Mr. Frist
September 30, 2005; Page A10
When "ethics" is in the political air, it can be hard to sort the real sins from the invented. The way to understand the recent charges against Senate Majority Leader Bill Frist is as a case of no good deed going unpunished.
The SEC is investigating Mr. Frist for unloading his shares of hospital chain HCA prior to a July earnings warning. Democrats are suggesting that an HCA insider gave Mr. Frist a call to tip him off. Mr. Frist denies it, and to date there is zero evidence -- nada, zilch, nunca -- to support the allegation. And nothing in Mr. Frist's past or character suggests he's the kind of politician who'd try to scam the system to save a few bucks.
The real issue here is the modern demand that politicians abandon all acquaintance with the world of commerce when they take office, lest they have a "conflict of interest." It looks to us as if Mr. Frist's good-faith attempt to comply with this demand is what has landed him in the headlines. A well-paid surgeon before he ran for the Senate in 1994, Mr. Frist also owned stock in HCA, a company his family helped to found. In an attempt to insulate himself from criticism, Senator Frist and his family put some $10 million of HCA stock into what are known as "blind trusts."
Blind trusts must be approved by the Senate Ethics Committee and are subject to a roster of rules. The idea is that some outside "trustee" manages the money, and the elected official is ignorant of his investments. In practice these trusts are never as "blind" as billed. While it is true that Mr. Frist would not have known what was in his trust on any one particular day, the trustees did send him general communications (on file with the Senate) about his holdings.
No surprise, then, that these trusts have hardly spared Mr. Frist criticism. In 2004, a liberal group filed an ethics complaint arguing that Mr. Frist's ties with HCA should bar him from voting on medical malpractice reform. The latest allegations were leveled by yet another partisan group, Citizens for Responsibility and Ethics in Washington. Its insider-trading complaint so far rings hollow.
Mr. Frist has said he first requested legal advice about selling his HCA stock in April to avoid any hint of future conflicts, and received Ethics Committee approval. If he did indeed ask for advice in April, this would have been before even HCA would have forseen earnings trouble. April would also have been a smart time to sell, with the company's stock up 40% for the year.
The irony is that Mr. Frist was never required either to establish a blind trust or to sell his shares. In both cases he did so to insulate himself from the appearance of any conflict. Instead, in doing both he has only made himself a bigger target for those who'd suggest he has something to hide. They want politicians to abjure all worldly goods, like Ralph Nader.
What these accusers miss is the entire point of the concept of "disclosure." The Senate ethics manual declares that Members should not be required to divest themselves of assets: "Instead, public financial disclosure provides the mechanism for monitoring and deterring conflicts." The guide also questions the wisdom of having politicians fully strip themselves of "worldly goods," given that it is "likely to insulate a legislator from the personal and economic interests that his or her constituency, or society in general, has in governmental decisions and policy."
Good point. The disclosure rules exist to prevent blatant conflicts, but they were never intended to bar Members from knowing what they owned or what was sold. Members of Congress ought to have some acquaintance with the world they represent, including private business. |
| quote: | Frist Studied HCA Sale
Two Months Before Warning
By DEBORAH SOLOMON
Staff Reporter of THE WALL STREET JOURNAL
October 1, 2005; Page A4
Senate Majority Leader Bill Frist began exploring ways to sell his shares in HCA Inc. on April 29, more than two months before a July 13 earnings warning caused the stock to fall, according to documents reviewed by The Wall Street Journal.
The timing of his communications about the sales will likely be a key defense for Mr. Frist, who is under investigation for potential insider trading by the Securities and Exchange Commission and the Department of Justice. Mr. Frist's shares weren't sold until July 1 and July 8, just several days before HCA's warning caused the stock to fall 9%. But the timing could help Mr. Frist, since it suggests he started the process long before HCA knew of its financial problems.
[Bill Frist]
In an email to his personal accountant on April 29, Mr. Frist said he wanted "to dispose of all hospital stocks in all the accounts that I have control of." On May 20, Mr. Frist drafted a letter to the Senate Ethics Committee asking for permission to "sell assets consisting of (i) securities issued by HCA Inc. and (ii) securities received as a result of owning securities of HCA Inc."
Mr. Frist's decision to unload shares in HCA, a for-profit hospital chain founded by his family, came as he was reviewing his Senate financial-disclosure forms that were due May 16, according to people with knowledge of the matter. The Tennessee Republican, who is considering a 2008 presidential run, had long been dogged by criticism for owning the shares while also helping to shape health-care policy. He has said he wanted to sell the stock to avoid the appearance of a conflict of interest.
The stock sales sparked federal probes because of the proximity to HCA's earnings warning. Mr. Frist has said he had "no information about HCA or its performance that was not publicly available" and has said he is cooperating with the federal investigations.
The Senate Ethics Committee gave Mr. Frist verbal approval to sell the shares on June 8 or June 9, according to people familiar with the matter, and on June 13 the senator sent letters to the two trustees overseeing his accounts, instructing them to dispose of the assets.
Investigators are looking at whether Mr. Frist received any inside information between the time he initiated the sale and when it was completed. If Mr. Frist had received inside information about problems, he was obligated to halt any pending sales, even if he had begun the process to sell months earlier, these people said. The scrutiny stems in part from the fact that six HCA insiders sold shares in early June, just weeks before the earnings warning. The SEC is also investigating those sales.
HCA insiders were selling shares throughout the first six months of 2005, including large sales in April, before Mr. Frist registered his interest in selling. However, there was no public warning of any trouble until July. An HCA spokesman has said that insiders make their own decisions about when to sell shares but that the company does prevent insider stock sales for two weeks before the end of the quarter and up until earnings are released.
Investigators are focusing on whether Mr. Frist received inside information from anyone at HCA, in particular his brother, Thomas Frist Jr., a director and the company's former chief executive, according to people familiar with the federal inquiries.
Thomas Frist wasn't among the six company insiders who sold stock in June. |
| quote: | Frist Stock-Sale Pattern Is Common
By TONY COOKE
DOW JONES NEWSWIRES
October 5, 2005; Page C11
WASHINGTON -- Whether or not Sen. Bill Frist's stock trades were improper, his pattern of sales isn't particularly unusual.
The Senate majority leader is in the news, as he is being investigated for selling his stake in HCA Inc. in July shortly before the company's earnings warning sent the stock down 9%. That is a sequence of events that to some suggests the improper use of inside information.
It is also a sequence that can be observed regularly. In recent weeks, for example, executives at Calpine Corp. and Regis Corp. sold a substantial number of shares in advance of bad news. HCA executives themselves sold many shares in the months leading up to the July announcement, but there is no evidence that their activity attracted much scrutiny from regulators until Mr. Frist disclosed his sales.
At Regis, five insiders sold shares for $2.4 million after Hurricane Katrina struck, but before the company announced the financial impact of the storm. After that announcement was made last week, the company's shares dropped 3.7% to $37.60 -- a price that was 9.4% below the average price at which insiders sold their shares.
Jack Nielsen, a spokesman for the Minneapolis-based hair-salon company, said the conduct of company insiders was consistent with company policy. The insiders who sold shares, he said, weren't in a position to know the big picture, and weren't aware of the impact of Katrina and other trends.
That explanation echoes the defense made by Mr. Frist, who has said he had no knowledge of the impending announcement at HCA. Mr. Frist's family founded the Nashville hospital chain, but Mr. Frist doesn't hold a position with the company. Mr. Frist's brother Thomas, a company director and former chief executive, wasn't among the HCA insiders who reported the sale of nearly $165 million in HCA stock in the first six months of 2005.
Calpine Chief Executive Peter Cartwright sold a little more than one million shares of company stock on Sept. 19 and Sept. 20, according to a filing with the Securities and Exchange Commission. On Sept. 21, the company confirmed that it was involved in a dispute with the Bank of New York Co., which is keeping it from withdrawing certain funds. Calpine shares dropped 12.5% that day.
Katherine Potter, Calpine's director of media relations, said that Mr. Cartwright's stock sales were done under a previously established plan. Mr. Frist similarly has said he began looking into divesting his HCA shares in April, and issued a firm instruction to his trusts in June that the shares be sold.
Ms. Potter said Mr. Cartwright's plan was established during an open trading window, a time when the company allows insiders to sell. Such windows are instituted by companies to allay concerns that insiders are using information inappropriately. HCA spokesman Jeff Prescott confirms that June 13, when Mr. Frist says he issued the instructions for his shares to be sold, was within HCA's trading window. (Mr. Frist, unlike a company executive, isn't bound by HCA's internal rules.)
Regis and Calpine said they hadn't been contacted by the authorities regarding the insiders' trades. The SEC and the Justice Department are both probing Mr. Frist's stock sales, but HCA's Mr. Prescott said he is unaware of any communication by the company with the two agencies before Mr. Frist disclosed his transactions last month. Spokesmen for the SEC and the U.S. Attorney's office said their agencies don't comment on pending investigations. |
By all means, investigate away. I don't like impropriety any more than the next man, but I really think this is a cheap sideshow that's about nothing more than politics. It's an ugly game. |
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| Fir3start3r |
| How does a "Blind Trust" work? :conf: |
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| Shakka |
| quote: | Originally posted by Fir3start3r
How does a "Blind Trust" work? :conf: |
| quote: | Blind trusts must be approved by the Senate Ethics Committee and are subject to a roster of rules. The idea is that some outside "trustee" manages the money, and the elected official is ignorant of his investments. In practice these trusts are never as "blind" as billed. While it is true that Mr. Frist would not have known what was in his trust on any one particular day, the trustees did send him general communications (on file with the Senate) about his holdings.
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I.e. in theory they prevent any "arms-length" transactions from occuring, among other things. Are you more curious about specifics, such as who is eligible to act as a custodian, how the assets are "concealed," etc?
Frist very well may or may not have acted on some exclusive insider information. Insiders make regular and sometimes suspicious looking stock sales at critical times during a company's course of business. It is something that is often both criticized and scrutinized. If it is true that the sale orders were instructed on April 29th, over 2 months before the stock actually tanked, it's going to be an incredibly difficult argument that he was acting with impropriety. Generally suspicous insider trading would be instructed/executed much more close to an actual, stock moving, binary event.
In any event, since when is it "illegal" to actually have a conflict of interest? It's how you act on it that determines whether it crosses any lines. |
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| MisterOpus1 |
| quote: | Originally posted by Shakka
I.e. in theory they prevent any "arms-length" transactions from occuring, among other things. Are you more curious about specifics, such as who is eligible to act as a custodian, how the assets are "concealed," etc?
Frist very well may or may not have acted on some exclusive insider information. Insiders make regular and sometimes suspicious looking stock sales at critical times during a company's course of business. It is something that is often both criticized and scrutinized. If it is true that the sale orders were instructed on April 29th, over 2 months before the stock actually tanked, it's going to be an incredibly difficult argument that he was acting with impropriety. Generally suspicous insider trading would be instructed/executed much more close to an actual, stock moving, binary event.
In any event, since when is it "illegal" to actually have a conflict of interest? It's how you act on it that determines whether it crosses any lines. |
I'm not sure I nor the author of the article I brought up ever mentioned it being illegal, just very questionable behavior and quite contradictory to what Frist was leading everyone to believe about his interests.
Admittedly, I haven't as much time to do my homework on Frist and his blind trusts. The fact that his blind trust stocks were in his family-owned business and that he sold them with great timing I believe is certainly enough for the SEC to get involved. Of course I realize that SEC investigations don't always turn up illegality, so I don't mind sitting on this one and waiting to see what happens (like I personally have much say in the matter anyway). |
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| Shakka |
| quote: | Originally posted by MisterOpus1
I'm not sure I nor the author of the article I brought up ever mentioned it being illegal, just very questionable behavior and quite contradictory to what Frist was leading everyone to believe about his interests.
Admittedly, I haven't as much time to do my homework on Frist and his blind trusts. The fact that his blind trust stocks were in his family-owned business and that he sold them with great timing I believe is certainly enough for the SEC to get involved. Of course I realize that SEC investigations don't always turn up illegality, so I don't mind sitting on this one and waiting to see what happens (like I personally have much say in the matter anyway). |
And, if Democrats can label him as a crook now, regardless of outcome, his political aspirations may be limited. Come on, media! I predict a movie reference by at least 2007.:disbelief |
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| Fir3start3r |
| quote: | Originally posted by Shakka
And, if Democrats can label him as a crook now, regardless of outcome, his political aspirations may be limited. Come on, media! I predict a movie reference by at least 2007.:disbelief |
Moore's never around when you need him!
Well...he is a-ROUND...
*snicker* |
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| MisterOpus1 |
Perhaps it's merely part of the process, but the SEC is definitely interested now - so much that a subpoena was given to Frist:
| quote: | SEC Issues Subpoena To Frist, Sources Say
Records Sought On Sale of Stock
By Carrie Johnson and Jeffrey H. Birnbaum
Washington Post Staff Writers
Thursday, October 13, 2005; Page A01
Senate Majority Leader Bill Frist (R-Tenn.) has been subpoenaed to turn over personal records and documents as federal authorities step up a probe of his July sales of HCA Inc. stock, according to sources familiar with the investigation.
The Securities and Exchange Commission issued the subpoena within the past two weeks, after initial reports that Frist, the Senate's top Republican official, was under scrutiny by the agency and the Justice Department for possible violations of insider trading laws.
Frist aides previously said he had been contacted by regulators but did not mention that the lawmaker had received a formal request for documents. The sources, who spoke on condition of anonymity because of the investigation, said Frist is expected to testify under oath about what he knew about the company's health in the weeks before he sold stock. Frist has told reporters that he did nothing wrong and that he directed the sale to eliminate potential conflicts as he considered a 2008 presidential bid.
The formal request for documents usually presages an acceleration of a federal probe. In Frist's case, regulators had to proceed with caution due to his status in Congress and their mutual desire to avoid triggering constitutional objections to the release of documents. The disclosure of the subpoena comes as Democrats blasted Frist anew for his financial and personal ties to Hospital Corporation of America, a Nashville chain founded in 1968 by his father and his brother, Thomas Frist Jr. Critics yesterday seized on a report that Frist held a substantial amount of his family's hospital stock outside of blind trusts between 1998 and 2002 -- a time when he asserted he did not know how much of the stock he owned......
http://www.washingtonpost.com/wp-dy...5101202286.html |
More can be read there. |
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| Shakka |
| We had an SEC audit at my office once. They're actually semi-regular events. Those people are relentless when they get an idea in their head. |
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