Inside Information

So that kindly man of medicine, Dr. Bill Frist, the Tennessee Republican who heads the Senate GOP and dreams of becoming president, has found himself in what the good folks back home might call a "regular pickle." Seems that ol' Bill, always at the ready to visit hurricane victims with his trusty prop of a stethoscope around his neck, is being investigated by the Department of Justice and the Securities and Exchange Commission for a suspiciously timed unloading of copious shares of stock in Nashville-based HCA Inc.

Nothing to see here, says the Doctor-Senator hybrid. As Bill explains it, he's been been trying to dump these stocks for ages now in hopes of putting an end to nagging conflict-of-interest allegations.

The Washington Post's Charles Babington and Carrie Johnson report investigators want to know whether Bill's sale of all his HCA holdings was based on inside information about a dour earnings forecast that the company had not yet announced:

"Frist held HCA stock in several blind trusts, whose holdings have been valued at between $7 million and $25 million, according to a financial disclosure statement filed earlier this year. The company was founded in 1968 by his father and his brother, Thomas Frist Jr., a former company chairman who remains on its board."

Surely, Thomas Frist Jr. wouldn't have let any earning forecasts slip while the brothers were maybe playing golf or rasslin' in the shadows of the Smokies.

We will say this, though. The illegality of acting on so-called "inside information," as it relates to stock tips, has always struck us as a mighty ambiguous statute. The stock market is essentially a big gamble, anyway, one played through an investor's educated guesses and weighing of available information. One can understand the logic of law enforcement bearing down on the blabbermouth who conveys ostensibly "inside" scoop, but it seems odd (from our admittedly non-expert perspective) to blame the investor who then acts upon it.

After all, who in his or her right mind would then simply not act on what could be a potential loss of hundreds of thousands of dollars? The implied directive seems to be that losing investment dollars is OK, but if you hit the jackpot, look out. Uncle Sam smells a rat.

Isn't the point of business networking, the push to make connections and forge relationships in the marketplace, about -- to some extent -- gleaning knowledge? How can the arbiters of "inside information" draw fine distinctions between knowledge and information? The hitch, it seems to us, is that knowledge indicates that it's yours. The implication with knowledge is that you've filtered the incoming info, distilled it, rotated its tires and run it up the flag pole. You can do with it what you will.

But information -- it seems to us that the law sees that as a different animal altogether. Information is the change you find in the coin return at the pay telephone. It's the newspaper you come across on the subway seat.

According to the law, we guess, you're just not supposed to take those. And when you discover you're about to take a beating in the stock market, you're supposed to relax and try to enjoy it.