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Bill Frist: The New Martha Stewart?

by TChris

When Martha Stewart sold some stock before its price fell, suspicions of insider trading led to an investigation that led to a criminal conviction (although not of insider trading). What will happen to Bill Frist, who sold his stock in HCA, the hospital company that his family founded, just before its shares began to plummet in value?

Sen. Frist says he sold the stock to avoid the appearance of a conflict of interest as the Senate considers health care legislation. Funny that he never troubled to disinvest himself of that conflict before. Could Frist have dumped the stock because he had inside knowledge of an upcoming announcement of poor second-quarter earnings that would cause its value to decline? Will federal investigators come knocking on his door, as they did with Martha?

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  • Re: Bill Frist: The New Martha Stewart? (none / 0) (#1)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:10 PM EST
    Funny how seven senior executives dumped a half-million shares in late may and early june. Perhaps Frist's brother, who serves on the board, told him to get out while the getting was good... Frist Stock Sale Raises Questions on Timing

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#2)
    by cpinva on Sat Dec 17, 2005 at 01:04:10 PM EST
    slowly but surely, sen. frist is beginning to exhibit the classic signs of medical doctorhood, that we in the accounting profession encounter frequently: because they have an m.d., they tend to think they are experts in every other field of human endeavor. it is this hubris, either natural or the result of surviving medical training, that causes most of them to be considered easy pickings for charlatans, especially with regards to financial matters. most dr's i've encountered are the world's worst businessmen, but fancy themselves experts. it is the universal scourge of the profession.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#3)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:10 PM EST
    Corruption exists everywhere -- but it seems that only the small corruptions of the Dems are pursued and punished; and the Repubs (who never apologize) are somehow invited to take what they will. It is sad to see how unfair it all seems... starting at the top of the Admin.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#4)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:10 PM EST
    Can you where an ankle bracelet in Congress?

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#5)
    by DonS on Sat Dec 17, 2005 at 01:04:10 PM EST
    Its not a question of whether there was insider trading, but whether it will be investigated, prosecuted and proven. On its face, it seems naked. The insider trading rules are broad enough to nail him, but apparently he's received assurances that a wink and a nod will suffice.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#6)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:10 PM EST
    clay_m - Hmmmm, let me see. According to the article:
    a month later, after the stock was sold, its price tumbled 9 percent when
    Gee, I have never seen a stock tumble 9% based on bad earnings news. Gosh and wow. That is truly unusual. And actually, it went further down about 17%. Again something that is almost unheard of. et al - If it can be proven, have at him. But you will need more than the above.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#7)
    by Darryl Pearce on Sat Dec 17, 2005 at 01:04:10 PM EST
    (they) are the world's worst (whatever), but fancy themselves experts. it is the universal scourge of the profession.
    I know I'm not an expert at anything. Which has led me to be skeptical. I also avoid being gullible. Which has led me to being cynical.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#8)
    by DonS on Sat Dec 17, 2005 at 01:04:10 PM EST
    A simple chart check shows the recent HCA drop was virtually the only one and the most precipitous in over 2 1/2 years. So that qualifies as an event for this stock. I think any analyst who would have run up the sell flag would be feeling pretty smug right now. But that's what an investigation will show, or whether it was an event based on information not generally available to the stock owning public.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#9)
    by Molly Bloom on Sat Dec 17, 2005 at 01:04:11 PM EST
    This is out of my area of expertise, but this sounds like a violation of Rule 10b5 to me.Trading on Material inside information... what was his pre-exisiting plan to sell, when was it formulated viz a viz the information that the quarter's profits were going down? Any securites experts out there? This warrants a blog entry by an expert.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#10)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:11 PM EST
    Jim: Gee, I have never seen a stock tumble 9% based on bad earnings news. Gosh and wow. That is truly unusual. And actually, it went further down about 17%. Again something that is almost unheard of. Surely you jest, Jim. You don't get out much, do you? Or was that sarcasm? It is so hard to tell these days. Just in case you are serious, Jim, here's some facts: 5 years ago, shares of Apple computers fell 52% after a bad earnings report. Shares in Nortel dropped 29% after a similar bad earnings report. That only took a couple of minutes to find. Need I go on or are you ready to admit that you were either being sarcastic or didn't know what you were talking about?

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#11)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:11 PM EST
    Oops, somehow this got out of the italics: And actually, it went further down about 17%. Again something that is almost unheard of. Just wanted to make clear that Jim said that, not me.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#12)
    by aw on Sat Dec 17, 2005 at 01:04:11 PM EST
    The Frists are neither inexpert nor gullible when it comes to the family business (HCA). Remember a few years back when HCA had to pay a fine of a billion dollars (yes, a billion) for defrauding Medicare. If they had to pay a fine of a billion, how much do you think they actually stole?

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#13)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:11 PM EST
    Clay_m - It is called satire. DonS - The drop happened after a bad earnings report. The question is, did Frist sell based on insider information. A (total) drop of 17% over a month doesn't seem extreme or unusual ro me, but then I got used to riding the techie stocks. The other issue which places it away from Martha: What is the expectation that it will recover in a reasonable period of time, and was the run-up unusual within its industry/market? In her case the run up was based on expected FDA approval, and the sell was based on information that the FDA wouldn't approve. If he sold a month before the report that would be two months after the previous quarter. With quarterly earnings, and since the accusation is based on pre-knowledge of bad earnings, the only way for him to avoid an appearance is to sell the next day after an earnings report. All in all, it sounds like Repub baiting to me.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#14)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:11 PM EST
    Apologies for failure to recognize satire, Jim, but it is harder and harder to tell in this political environment. As we all know, those bushbots will say just about anything to defend the gop these days. A (total) drop of 17% over a month doesn't seem extreme or unusual ro me, but then I got used to riding the techie stocks. As pointed out above, the biggest drop in 2.5 yrs for HCA. Hardly typical. The question is, did Frist sell based on insider information. Seeing as how his brother is on the board, it is a distinct possibility and should be investigated.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#15)
    by squeaky on Sat Dec 17, 2005 at 01:04:11 PM EST
    but the stocks were in a blind trust. I guess bill wasn't masturbating enough for it to be effective.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#16)
    by kdog on Sat Dec 17, 2005 at 01:04:11 PM EST
    Insider trading is common practice. Frist, if guilty, will get away with it. He's connected, insider trading charges only fall on the unconnected.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#17)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:11 PM EST
    Going to trial might help his image -- after all look what it has done for Ms.Stewart...he could end up with two really bad television shows.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#19)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:11 PM EST
    It is passing strange for a blog putatively devoted to criminal defense and civil liberties to trot out Martha Stewart and then compare Sen. Frist to her. As noted, Stewart wasn't charged with insider trading - in fact there was no likelihood that she COULD be charged with insider trading. She was certainly threatened with the possibility of being charged with insider trading, even though those doing the threatening had to know there was nothing there. Stewart's mistake was to volunteer information to investigators WITHOUT AN ATTORNEY PRESENT. Whatever her reason(s) for doing this, she violated the fundamental rule when you are being questioned: government investigators (police, whatever...) are NOT YOUR FRIENDS. NEVER VOLUNTEER ANYTHING. Always have a lawyer present. If there is a reason to compare Frist to Stewart, it would be to expect that Frist will not make the same mistake she did. He'll have a whole battalion of lawyers on hand. Incidentally, I would expect that lawyers would understand that coincident events are, in and of themselves, of little or no probative value. They may raise a red flag for investigators but that's it. My impression is that the good civil libertarian lawyers who run this blog are only too eager to prejudge Frist. Things sure have changed since my old ACLU days. I always started out with the assumption that government prosecutors were up to no good. A prejudice, yes, but a salutary and, I believe, a necessary one.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#20)
    by Che's Lounge on Sat Dec 17, 2005 at 01:04:11 PM EST
    Senator Frist had reported this year that he owned $7 million to $35 million in assets, including his HCA shares, that were in blind trusts managed by others to reduce the appearance of conflicts. Although more than $10 million of the initial holding of the trusts was shares in HCA, Mr. Frist's spokesman said Wednesday that he could not determine how many shares remained. So if it's already in a blind trust, why be worried about a conflict? Too bad Jimbo, but 50% of Frist's problem is due to the fact that the stock fell so precipitously. That was the red flag. I wouldn't draw conclusions for now but that was a brilliant stock move. And it should be investigated. And cpinva is dead on.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#21)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:11 PM EST
    DA - And I'll be sure to tell everyone all the tax avoidance tricks I learned from you. ;-)

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#23)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:12 PM EST
    Darryl: "I also avoid being gullible. Which has led me to being cynical." Idealism is not gullibility, though it can be. It is knowledge of the potential, and commitment to it; sometimes with gullible expectation of the kinetics. Cynicism is cheap, and serves the status quo. All kinetics are entropic, meaning that they pay out for someone, rather than for everyone. Frist illegally screwed the other stockholders to the wall. ENRONing the players at Wall Street's evil game is a cynical disease of Republicans. I'd rather fight for the flowering free rights of youth, than the bitter cynicism of dead old men who count their dead piles of cash which will not save them.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#24)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:12 PM EST
    and PPJ could come on, show his diploma with the gold seal, and tell all and sundry how he's been using the training while posting on this site.
    DA - Perhaps I should tell them you tried to sell me some? Naturally, I refused. ;-) Nit for nat, the children play In middle school some do stay. Paul Hager - You must understand that some animals are more equal than others.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#25)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:13 PM EST
    Paul Hager: It is passing strange for a blog putatively devoted to criminal defense and civil liberties to trot out Martha Stewart and then compare Sen. Frist to her. Now that's an odd thing to say. I don't see anything like that in this blog's mission statement. Here is the closest it comes to that: TalkLeft is not a neutral site. Our mission is to intelligently and thoroughly examine issues, candidates and legislative initiatives as they pertain to constitutional rights, particularly those of persons accused of crime. Talkleft is intended for the public, journalists covering crime-based news and politics, policy makers and of course, the criminal defense community. Comparing and constrasting the treatment of a wealthy democrat versus the treatment of a powerful republican politico in similar situations fits right into the mission statement. So where's the problem, Paul?

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#27)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:13 PM EST
    DA - It would help you if you would review this thread. At 10:23AM you made a snarky attack on me. Prior to that I had not mentioned you. Now why did you do that, DA? Shall I tell you? What a load had just posted a cute comment about Frist going to jail, and you just couldn’t resist jumping in:
    He could do infomercials about his "Remote Diagnostics" course, and PPJ could come on, show his diploma with the gold seal, and tell all and sundry how he's been using the training while posting on this site.
    I have explained to you several times that you get no free pass from me, yet you continue to start the action. And when snarked back you start talking about channeling, etc. If you have some comment about Frist's stock sale, and how it may/may not be worthy of investigation, why not make it? Instead you always concentrate on personal comments. Why is that? My guess? You haven't anything to say. And if Edger and I push and shove a bit, why isn't that our business? He certainly seems more than capable of taking care of himself, so why do you feel you must defend? If this were you telling me, you'd be using psycho babble about a "Father Complex" or something, I'm sure.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#28)
    by scarshapedstar on Sat Dec 17, 2005 at 01:04:13 PM EST
    Sen. Frist says he sold the stock to avoid the appearance of a conflict of interest as the Senate considers health care legislation.
    What a crock of sh*t! Earth to Senators: When you take money and gifts from lobbyists and then pass whatever legislation they want, that is a conflict of interest. My god, I hate these scumbags. New government please.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#29)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:13 PM EST
    scar - The appearance he was speaking of, and I think you know this, was connected with the fact that, even though they were in a blind trust, obviously anything he did would have an effect on them.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#31)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:14 PM EST
    Jim noted: "You must understand that some animals are more equal than others." Tell it to the people of New Orleans. It's the PIGS who run the 1984 barnyard, Jim. YOUR pals. Your Stalinist head pig. Your bully boy immigration vigilantes. Your pigs at the trough noisily sucking up the profits of disaster.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#32)
    by jimakaPPJ on Sat Dec 17, 2005 at 01:04:14 PM EST
    DA - My comments should be easy to understand. Prior to 10:23 I had not made mention of you, yet you made a snarky attack. You got snarked back. Enjoy. PIL - The comment, comes from "Animal Farm." It has nothing to do with NOLA. It explains that people will treat each other based on their particular set of beliefs.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#34)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:15 PM EST
    JIm, stating the obvious: "PIL - The comment, comes from "Animal Farm." Gee, how can you tell? "It has nothing to do with NOLA." It has PLENTY to do with NOLA. "It explains that people will treat each other based on their particular set of beliefs." Actually, not. It is a clearcut metaphor for STALINISM, the same Stalinism that your boy Bush is a big fan of. The same prejudice and class privelege that made Napoleon the fat pig he was. And guess what, Jim: You are Squealer. The APOLOGIST PIG who is used by Napoleon to explain away the actions of the pigs that violate the Seven Commandments on which Animal Farm is founded. Squealer Jim revises history to make it fit Napoleon Bush's increasing GREED. It's an ugly story.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#35)
    by TChris on Sat Dec 17, 2005 at 01:04:15 PM EST
    Paul, I wholeheartedly agree that it is a bad idea to speak to a federal investigator. My point is not that Frist should be presumed guilty -- even obnoxious Republicans are protected by the Fifth Amendment. My point, perhaps not artfully made, is that federal investigators quickly presumed (or at least strongly suspected) Martha Stewart's guilt. I asked whether, in a case involving comparably suspicious timing, the feds would pursue a similar investigation of a powerful Republican Senator. (A question that, I believe, answers itself.) I did not intend that question to be disrespectful of Frist's presumptive innocence.

    Re: Bill Frist: The New Martha Stewart? (none / 0) (#36)
    by Talkleft Visitor on Sat Dec 17, 2005 at 01:04:15 PM EST
    "My point is not that Frist should be presumed guilty -- even obnoxious Republicans are protected by the Fifth Amendment." OF COURSE HE SHOULD BE PRESUMED GUILTY. Just not by a court, though of course arrest involves presumption of guilt. The Fifth Amendment does not bind the public.