Frist discussed stock sale early

WASHINGTON – Private e-mail between Senate Majority Leader Bill Frist, R-Tenn., and his advisers reflects that Frist began discussing the sale of his HCA Inc. stock in April, months before it became clear that the hospital firm’s shares would decline in value, according to documents reviewed by the Washington Post.

An April 29 message from G. Allen Hicks, chief counsel to the majority leader, informs the senator that they can discuss his “blind trust question sometime today.” Frist also exchanged e-mail with his accountant, Deborah Kolarich, in Nashville, the same day in what he called an effort to “dispose of all hospital stocks in all accounts that I have control of.”

The documents, provided by sources sympathetic to Frist, make up only part of the record under review by investigators at the Securities and Exchange Commission and the U.S. attorney for the Southern District of New York, which are scrutinizing whether the stock sales violated insider trading laws.

Frist advised his brother, HCA board member and former chairman Thomas Frist Jr., of his decision to unload the shares in late April, weeks before the lawmaker told an official who controlled his blind trust about the decision, according to sources who spoke on the condition of anonymity because of the investigation. It remains unclear whether the disclosure that Frist conferred with his brother, who helped found the Nashville company in 1968, will attract more government scrutiny.

The trustees who controlled Frist’s HCA stock sold the shares by July 8, days before the company reported weaker-than-expected earnings that drove down the stock price 9 percent in a day.

The Frist case underscores the burden government lawyers face when investigating insider trading cases, which generally center on the painstaking accumulation of circumstantial evidence.

“Insider trading is one of the most difficult kinds of white-collar cases for prosecutors to investigate and prove,” said former assistant U.S. attorney Michael S. Schachter, a Willkie Farr & Gallagher lawyer who helped prosecute Samuel D. Waksal, a friend of Martha Stewart, for insider trading.