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SEC opens formal probe into Frist stock sale

[JURIST] The US Securities and Exchange Commission [official website] has opened an official investigation into the finances of Senate Majority Leader Bill Frist [official profile]. Sources close to Frist said the SEC had authorized an investigation into Frist's sale of HCA Inc. [corporate website] stock in June, although the SEC has not yet publicly announced the investigation. A formal investigation gives the SEC greater powers, including authority to subpoena documents and witnesses to testify. Frist requested his stock in HCA, the nation's largest hospital chain founded by Frist's father and brother [HCA backgrounder], be sold in early June, only weeks before the company said its second-quarter earnings would not meet expectations. HCA stock prices fell by almost $5 following the announcement. Frist's brother, Thomas F. Frist, Jr. [official profile], serves as a director for HCA. The US Justice Department is also investigating Frist's stock sale, while both HCA and Frist said they intended to fully cooperate with the investigation. Several ethics groups, including Citizens for Responsibility and Ethics in Washington [advocacy website], also urged the Senate ethics committee to look into the matter [CREW news release]. Frist released a statement [text] regarding his finances on his website earlier this week. Bloomberg has more.

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