Senate Majority Leader Bill Frist, now under a formal investigation by the Securities and Exchange Commission for insider trading, made between $2 million and $6 million by selling his HCA holdings just before stock values plummeted in the face of a bad earnings report, an analysis released today by the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR) alleges.
FTCR also pointed to overly rosy earnings projections made by HCA executives at a conference with investors just as Frist and HCA insiders were dumping HCA stock en masse, saying HCA Sr. Vice President Vic Campbell's made misleading statements to investors.
The key factors stock analysts look to in judging hospital chain profitability are patient admissions and whether it is insured or uninsured patients who are being treated, since uninsured patients are not profitable. The company's interims statements about both indicators were overblown, the group said.
FTCR also claimed to have uncovered information showing Sen. Frist directed trustees not to sell his HCA stock. Each of the Senator's trust agreements acknowledged their high concentration in HCA stock, and specifically relieved trustees "from any obligation the Trustee might otherwise have to diversify the investments."