Folks, we've got ourselves a real live stink bomb on our hands here, if not a full-blown scandal-to-be. I'm talking about the widening interest in Senate Majority Leader Bill Frist's unusually well-timed liquidation of his shares in the family biz, hospital operator HCA (NYSE: HCA ) . It seems both the Feds and the SEC want to learn more about this. A Frist spokeswoman confirmed that the SEC has contacted Frist and that the U.S. Attorney's Office for the Southern District of New York has issued a subpoena for documents from HCA, where the Senator's brother is still a board member.
As I discussed yesterday, the Senator's "blind trust" was a pretty interesting specimen of intelligent design -- if you want to design a trust that's not so blind, nor trustworthy. Contrary to its stated goal, it did not insulate him from his first-degree conflict of interest. (He was fully aware that he owned HCA stock.) Moreover, the setup allowed him to request liquidation of that stock, although the exact timing would not, apparently, be under his control.
But that may make little difference now. The press is already marveling about the Senator's fortunate timing. His shares were sold very near the 52-week high and just before a disappointing earnings report sent the stock down 15%.
Complete coincidence, according to responses from Frist's spokespeople. The sale was made in order to avoid the appearance of a conflict of interest, they say. This Fool would love to know why, after many years of this conflict, the Senator suddenly decided to resolve it in June, when so many other insiders were dropping their shares. Since we don't know how much HCA stock Frist held, we can't even calculate the wages of his good fortune, but how much should that matter?
"We must instill moral values and character in our children, teach them the difference between right and wrong, between fantasy and reality, and offer them worthy role models to emulate." Those are the words of Frist -- or, more likely, one of his paid wordsmiths -- taken from his official "issue brief" on crime and justice.
Let's hope that his behavior during this case lives up to those aspirations. If not, let's hope he pays the price for being such a poor role model for instilling moral values in American children.
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