SEC reportedly subpoenas Frist's files on stock sales

WASHINGTON -- Senate majority leader Bill Frist, Republican of Tennessee, has been subpoenaed to turn over personal records and documents as federal authorities step up a probe of his July sales of HCA Inc. stock, according to sources familiar with the investigation.

The Securities and Exchange Commission issued the subpoena within the past two weeks, after initial reports that Frist, the Senate's top Republican official, was under scrutiny by the agency and the Justice Department for possible violations of insider trading laws.

Frist aides previously said he had been contacted by regulators but did not mention that the lawmaker had received a formal request for documents. The sources, who spoke on condition of anonymity because of the investigation, said Frist is expected to testify under oath about what he knew about the company's health in the weeks before he sold stock. Frist has told reporters that he did nothing wrong and that he directed the sale to eliminate potential conflicts as he considered a 2008 presidential bid.

The formal request for documents usually presages an acceleration of a federal probe. In Frist's case, regulators had to proceed with caution because of his status in Congress and their mutual desire to avoid triggering constitutional objections to the release of documents. The disclosure of the subpoena occurs as Democrats blasted Frist anew for his financial and personal ties to Hospital Corporation of America, a Nashville chain founded in 1968 by his father, the late Thomas Frist Sr., and his brother, Thomas Frist Jr. Yesterday, critics seized on a report that Senator Frist held a substantial amount of his family's hospital stock outside of blind trusts between 1998 and 2002 -- a time when he asserted he did not know how much of the stock he owned.

The Associated Press reported Tuesday that Frist earned tens of thousands of dollars from HCA stock in a partnership controlled by his brother, outside of the blind trusts he created to avoid a conflict of interest.

During his decade in the Senate, Frist has been active in shaping healthcare policy, including creation of a Medicare prescription drug benefit.

Republican ethics lawyer Jan W. Baran also criticized Frist for his handling of his trusts. ''This shows Senator Frist's capacity for clumsiness and bad timing," Baran said. ''He was trying to insulate himself from political charges and now finds himself trying to defend himself because of the transparency of his holdings."

The subpoena for documents related to the July stock sales was written carefully to avoid asking for documents related directly to Frist's legislative actions, according to sources. By keeping the request focused on his personal activities, specialists said, the SEC avoided raising objections from Senate lawyers who might otherwise have fought the request on the grounds of constitutional separation of powers.

The wording in the subpoena also ensured that Frist did not have to tell colleagues about the document request or to otherwise involve them in the investigation, congressional aides said.

A spokesman for Frist said yesterday: ''As we have indicated, Senator Frist has been fully cooperating with the authorities conducting the inquiries and will continue to do so, including keeping our public comments to a minimum. The issuance of a subpoena would be an expected and normal part of that process."