Reuters reports that the Securities and Exchange Commission appears to be investigating Senate Majority Leader Bill Frist's (R-TN) sell-off of his, his wife's and their children's shares in Hospital Corporation of America, which his father founded and of which his brother was the CEO and continues to be a board member. Frist had been criticized in the past for holding stock in the country's largest for-profit hospital chain while making policy on health care, and would reply that because all his holdings were in a blind trust there could be no conflict of interest. However, on on June 13 he requested the sale of all of his remaining HCA stock, and a month later HCA's shares fell almost 9% following a warning that second-quarter operating earnings were likely to fall short of analysts estimates.

Frist's spokesman Bob Stevenson said "Senator Frist had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock. His only objective in selling the stock was to eliminate the appearance of a conflict of interest. The majority leader will provide the SEC any information that it needs with respect to this matter." The SEC routinely investigates stock sales made before negative news for signs of insider trading.

What the story made me wonder was the extent to which one can continue to control the shares in a "blind" trust. I had assumed that by putting one's holdings into such a trust, one no longer could make decisions regarding them, perhaps with an exception for trades made for non-financial reasons (such as buying stock in Israeli companies to show support in the face of calls for divestiture). Can anyone with more knowledge of trusts and estates clarify this?