September 28, 2005

Dr. Frist's not-so-blind trust

It looks like the truly creepy Sen. Bill Frist has some explaining to do himself for his insider trading in what was supposed to be a blind trust. Turns out he dumped all his stock in the enormous hospital corporation HCA founded by his dad and brother just before it lost about 10% of it's value, thus potentially saving Senator Frist millions of dollars.

A blind trust is an account that is... well.. blind, in that the person it's administered for is supposed to have no idea what assets are in the account.

Whether he is guilty of insider trading depends on whether Frist had "material nonpublic information" about HCA at the time he ordered the sale of not only his shares, but those of his wife and children as well. Of course, Frist, while slightly spooky, isn't dumb enough to admit this, so it is unlikely he'll suffer the consequences.

His rationale for directing the sale of the stock just days before it tanked was that he wanted to avoid the appearance of conflict of interest, which of course begs the question of why he decided to dump the stock now after having held it for many years. Apparently Frist's concerns about the appearance of a conflict only emerged just days before the stock tanked. Curious, is it not? Martha Stewart went to prison for less. Will the good doctor?

George W, who while serving on the audit committee of an oil company dumped a boat-load of stock in the failing outfit just before it's stock value fell through the floor, thus violating inside trading laws, and then failed to report the sale until far beyond the deadline for doing so, thus breaking further laws, then walk away scot-free. How you may ask? Well, the head of the SEC which was asked to investigate happened to be Daddy Bush's attorney. And Daddy Bush happened to be vice-president at the time.

So, is it ok to indulge in illegal insider trading if you're a high ranking Republican, but not if you're anyone else? We shall see.


At 9/28/2005 8:08 PM, Blogger maybesomeday said...

I'd like to be at the future dinner party where Martha Stewart rubs elbows with Bush and Frist and she asks them how they got away with it?

That would be entertaining....


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