The Blog

Could Senator Frist be the Next Martha Stewart?

Frist says he was going "beyond what ethics requires" by selling off stock in a company right before it released a bad earnings report. And which ethics would those be?
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Senator Bill Frist (R-TN) held on to his shares of Hospital Corporation of America (HCA) through thick and thin. When people said it might be a conflict of interest for him to have millions of dollars invested in the largest for-profit hospital chain in America while he presided over legislation affecting the medical industry, he stood firm. He would not sell under any circumstance – that is, of course, unless he got wind of a negative earnings report that was about to come out.

Two weeks before HCA announced their disappointing earnings on July 13, 2005, Senator Frist finally decided to sell all of his shares in the company. What a coincidence, because as luck would have it the earnings news led to the stock of the company dropping 15%.

When Frist’s spokeswoman, Amy Call, was asked to explain the fortuitous divestiture, she responded, “To avoid any appearance of a conflict of interest Senator Frist went beyond what ethics requires and sold the stock.” That’s precious – “beyond what ethics requires.” You see, it might have been slightly more ethical to sell those shares BEFORE he guided the enormous Medicare bill through Congress.

To claim, years after the legislation has been passed, that Senator Frist all of a sudden had an ethical convulsion right before the stock of the company took a plunge stretches the bounds of credulity. In other words, it’s bullshit.

But it gets better. When asked why this ethical concern never surfaced before, the Senate Majority Leader’s spokeswoman answered, “I don’t know that he’s been worried about it in the past.” You don’t say. Gee, I wonder why he became concerned about it all of a sudden.

By the way, Senator Frist claims to have these assets in a blind trust. How blind could the trust be if he knows exactly what company he has the stock in and has complete authority to order a sell-off? That’s the most 20-20 blind trust I’ve ever seen.

This would be good for just another laugh, like the time Kitty Killer Frist massacred all those cats up in Boston for unauthorized “experiments” (that was a belly-buster), if it weren’t seriously illegal. I remember someone else on a power trip getting sent to prison for a transgression quite similar to this. Her name is Martha.

Martha Stewart famously sold off stocks based on an insider tip right before they crashed. She was eventually convicted for lying about the scheme. So, one has to wonder – what did Senator Frist know and when did he know it?

If I was a prosecutor charged with making sure people didn’t trade on insider secrets, I might be rather curious about the timing of this transaction. By the way, Senator Frist’s brother, Thomas Frist, Jr. happens to be a director and leading stockholder of HCA. Another coincidence, I’m sure.