WASHINGTON (AP) — While insiders at HCA Inc. were selling millions of dollars of their own stock this year, they were also painting a sunny picture of the company’s outlook for investors. Federal prosecutors and the Securities and Exchange Commission are investigating the sale of HCA stock by Senate Majority Leader Bill Frist, R-Tenn., whose family founded the company that grew into the nation’s largest for-profit health care chain.
The SEC turned its initial inquiry into a formal investigation of the company, HCA announced Thursday. The company said it is cooperating with investigators.
Frist’s office said Wednesday that he had gotten notice of a formal investigation, which grants subpoena powers to investigators to obtain information and documents.
On June 14, the day after Frist ordered his shares sold, HCA officers at a Goldman Sachs health care conference in Laguna Niguel, Calif., spoke optimistically about the company’s prospects.
Victor Campbell, HCA’s senior vice president of corporate communications and government relations, soothed investor concerns about unpaid patient debts and worries about patient volumes. He also advocated for a still-pending Senate bill that would limit the establishment of physician-owned specialty hospitals and called Washington “my favorite place … where I spend at least a day or two a week.”
In the month before the speech, Campbell sold about $12 million worth of stock. It was part of a massive insider sell-off at HCA that totaled some $112 million between January and June 2005.
HCA shares peaked about a week later, closing at $58.40 on June 22. On July 13, they tumbled 9 percent following the company’s announcement that it would not meet earnings expectations.
Bill Frist says he only sold that HCA stock to avoid the appearance of impropriety. I think he wanted to avoid the appearance of red ink on the income statement of his “blind” trust.
When all this is over, maybe Bill Frist can get his own talk show. I just hope he won’t try to make long-distance diagnoses.