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Frist stock sale reportedly probed
Reports: Spokesman confirms SEC looks into sales of HCA stock by Senate leader ahead of warning.
September 23, 2005: 8:48 AM EDT
Senate Majority Leader Bill Frist, R-Tenn.
Senate Majority Leader Bill Frist, R-Tenn.

NEW YORK (CNN/Money) - Senate Majority Leader Bill Frist, a potential Republican presidential candidate, is reportedly being investigated by the Securities and Exchange Commission for the sale of stock of HCA, the giant hospital company founded by his family.

HCA (Research) issued a statement Friday that it received a subpoena from the office of the United States Attorney for the Southern District of New York for the production of documents. It said it believes the subpoena relates to the sale of HCA stock by Frist, and it added it would cooperate with authorities.

The New York Times, Wall Street Journal and other publications reported Friday that a Frist spokesman confirmed the senator from Tennessee also was contacted about the stock sale.

"The Majority Leader will provide the SEC any information that it needs with respect to this matter," said a statement by spokesman Bob Stevenson to both papers. "Senator Frist had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock. His only objective in selling the stock was to eliminate the appearance of a conflict of interest."

The Times reported Frist asked the managers of blind trusts controlling many of his assets to sell any of his remaining shares in HCA on June 13. HCA shares closed that day at $55.93, near the 52-week high of $58.60. Shares plunged more than 10 percent to $50.05 on July 13 when the company issued full-year earnings guidance that disappointed Wall Street.

Frist's brother, Thomas F. Frist Jr., is a former chairman and CEO of the company and is still on its board. The Times reports Thomas Frist is still the largest individual shareholder of the company.

The Journal reports several HCA insiders also sold stock in the weeks prior to HCA's July 13 warning that it would not meet its second-quarter earnings target. The senator's brother and his father, Thomas Frist, along with former Kentucky Fried Chicken owner Jack Massey, founded HCA in Nashville, Tenn., in 1968.

Frist initially placed more than $10 million in shares of the company in his trusts, according to the Times report, but his spokesman said he could not determine how much remained at the time of the sale.

For a look at what Frist's new position on stem cell research means for biotech stocks, click here.  Top of page

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