Frist, HCA, and Insider Trading

First off, sorry for not posting the last few days. The Unknown Son turns 7 on Tuesday, and we had his birthday party at Chucky Cheese (a.k.a. "Chucky Disease" - if you're a parent, you get the joke) on Saturday since I teach on Tuesday. And, I'm behind deadline on a paper I'm presenting at an upcoming conference.

In any event, there's been a bit of a spotlight this week on Senate Majority Leader Bill Frist's trades in Hospital Corp of America (HCA) stock. According to the story, Frist unloaded shares of HCA held in a "blind trust" just before the company released some disappointing earnings numbers. Since he has family connections to the firm, there's the possibility that he was trading on "inside" information. Given his visibility as Senate Majority Leader, this will be in the news for a while. Here's a roundup from the old (and new) media on some of the major points:

Business Week has a story titled What Did Frist Know---And When. Frist's stock was held in a "blind trust". However, as Inigo Montoya said in The Princess Bride, "You keep using that word. I do not think it means what you think it means."

Tigerhawk presents an interesting argument that Frist was doing the right thing with his actions. Warning- the comments following the post are pretty politically charged - not surprising given Tigerhawk's own strong views on things political.

Steve Bainbridge (who may know more about the legal aspects surrounding insider trading than anybody else around) makes an argument that even if Frist had material nonpublic information, he might not be liable under rule 10b-5 (the applicable statute).