Consumer Watchdog – SEC Chair Steps Aside, But Independent Observer Still Needed to Ensure Transparency In Frist HCA Stock Sale Investigation

Santa Monica, California -- Securities and Exchange Commission (SEC) Chair Chris Cox's recusal from the investigation into Senator Bill Frist's stock trades highlights the need for Congress to appoint an independent observer to ensure a through, transparent inquiry of the sale, said the Foundation for Taxpayer and Consumer Rights (FTCR). FTCR sent a letter on Friday calling for an independent advisor to report to Congressional leaders. Click here to read the letter.

"Cox's immediate recusal from the Frist investigation signals his deep conflict, but fails to recognize that others at the SEC have a similar bias in favor of the Senator as a Bush administration ally. To ensure transparency, Congressional leaders must appoint an independent observer who will report to Congress, maintain a non-partisan investigation, and make all aspects of the inquiry public," said Carmen Balber, consumer advocate with FTCR.

In addition to calling for an independent observer that the SEC cannot provide, FTCR made documents available online that reveal just how much Senator Frist knew about the amount of HCA stock transferred into and out of his so-called blind trusts. The documents, filed by Frist or his trust managers with the Senate Office of Public Records, enumerate contributions of at least $1,125,000, and as much as $2,320,000, in HCA stock that was added to the trusts between December 2000 and the end of 2003. Just under $625,000 worth was sold during that time. Click here to read the documents.

Also in the letters, Frist directed his trust manager to sell all of his and his immediate family's HCA stock in the middle of June of this year, as the market value of HCA stock was peaking. Frist was notified his family stock was sold on July 1 and 8; the stock's value fell precipitously just 5 days later. HCA insiders, including the President, a Sr. Vice President and Officers of the company, exercised stock options and sold millions in the same time period.

FTCR filed an ethics complaint last April asking the U.S. Senate Ethics Committee to investigate Senator Frist for a conflict of interest in his advocacy of medical malpractice liability limits that would financially benefit HCA, which also owns the nation's fourth largest malpractice insurer.

Click here to read FTCR's complaint.

Click here to read the Ethics Committee response.

Earlier this year, consumer, labor and investor groups challenged Cox's nomination to chair the SEC. Cox had a troubling record on consumer and investor protection votes, and, as a private attorney, was involved with a man convicted of defrauding California investors out of millions. FTCR produced a spoof video opposing Cox's nomination featuring Greg Germann (who played Richard Fish on Ally McBeal), playing a jailed executive and "thanking" President Bush for nominating Congressman Chris Cox to head the Securities and Exchange Commission (SEC). Click here to see the video.

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