This sounds like blatant insider trading. We should scream bloody murder about this until the Democratic leadership starts doing the same. We should absolutely call for his resignation.

If this fans enough flames, then Frist will be permanently screwed. He already became a laughingstock by prostrating himself before the fundies during the Teri Schiavo affair (making diagnoses outside his area of expertise on a patient he never examined). Then he turned around & pissed off the fundies by supporting stem cell research. But the independents whom he was courting with stem cells should be properly outraged if we paint this for what it is: blatant, illegal proifteering.

Rule 10b5-1

Rule 10b5-1 would define when a sale or purchase of a security occurred "on the basis of" material nonpublic information. Under the rule, a person trades "on the basis of" material nonpublic information if the person making the purchase or sale was aware of the material nonpublic information at the time of the purchase or sale. However, the rule provides exclusions for certain situations in which a trade resulted from a pre-existing plan, contract, or instruction that was made in good faith.

Off hand, I'd say inside information from your father and brother who are offices and directors qualifies as non-public. Material? well the stock did tank.
Defenses: Pre-existing plan, contract or instruction made in good faith. What was Frist's excuse again?

".. Frist decided in June to dump all the stock, and later cited as the reason his desire to avoid the appearance of a conflict of interest..."

A pre-exisiting plan in good faith? He was "avoiding an appearance of impropriety" But didn't he already have two rulings in the 1990's saying his blind trust was sufficient in this regard? When was this plan made? Let's see the documentation. When did his daddy and brother find out "that hospital admissions of insured patients were lower than expected, depressing profits in the second quarter?" Let's see those books!

This is neither conflicting nor misleading. When a holder of a large block of shares requests they be sold, it is usually necessary that the broker sell them off slowly over time in order to get the best price for their client. If they tried to sell them off all at once, the price would plummet immediately. As such, the length of time for the sale to take place is not troubling.

Tim continues, "The article also states that blind trusts are intended to prevent a conflict of interest, though that doesn't pass the smell test when the stockholder has the ability to instruct the trustee when to sell all the shares, and especially when the stockholder happens to be a member of the family that runs the corporation."

Now I'm not 100% on this, but if the entire trust holds nothing but the one company's stock, then there would be nothing improper on the face of it about Frist saying sell it off.

But keep in mind, those two issues aside, it still doesn't explain the convenient timing of the sale. If he sold the shares based on information that wasn't publically available, then he's in big trouble. That, AND THAT ALONE, is the issue with insider trading and that is where the focus should be. These other two issues regarding the length of time it took to complete the sale of the stock or the ability to sell out of a blind trust is ultimately beside the point.

With apologies to Ricky Ricardo, Frist has some 'splaining to do.

WASHINGTON (AP) - When Senate Majority Leader Bill Frist asked a trustee to sell all his stock in his family's hospital corporation, a large-scale sell-off by HCA Inc. (HCA) insiders was under way.

Shares of the Nashville, Tenn.-based hospital company were near a 52-week peak in June when Frist and HCA insiders were selling off their shares - just about a month before the price dropped.

Information about the insiders' moves was publicly available through disclosures required by the Securities and Exchange Commission.

About 2.3 million shares, worth about $112 million, were sold by HCA insiders from January through June, with sales getting larger as the spring wore on, said Mark LoPresti of Thomson Financial. In May and June, 770,629 shares were sold for total gains of $42 million, he said.

The sales, which included moves by Hospital Corporation of America's chief executive, treasurer, senior vice president for government programs and several directors, were among the largest insider selloffs analysts had seen, LoPresti said. Many officers made their largest trades ever in April, only to top them again in May and June, LoPresti said.

Meanwhile, HCA shares continued a steep climb that would ultimately take the price up 56 percent from October 2004 to July 2005, peaking in late June, LoPresti said.

But the insider selling was a sign of looming trouble, LoPresti said. Uninsured patient admissions were rising faster than those of insured patients, federal reimbursements were declining in real terms and payments did not keep up with cost increases. LoPresti himself discussed the insiders' moves as a warning to sell on an April 11 broadcast on the cable channel CNBC.
Shares of HCA peaked June 22 at $58.40 and then began a slide that would drop the stock almost 16 percent by mid-July. They have still not recovered, closing Thursday at $45.90.

(Source)