THE ARREST last week of Republican Chris Collins, a congressman from New York, exposed a gaping hole in the ethics guidelines in the House of Representatives. Unlike senators, the 435 members of the House are allowed to serve unpaid on outside boards of directors, creating an obvious invitation to real or perceived conflicts of interest. Thankfully, members of the House have proposed closing that loophole, a change that should be speedily adopted.
Federal prosecutors say Collins, who was a major investor and board member of pharmaceutical company Innate Immunotherapeutics Ltd., engaged in illegal insider trading when he learned, in 2017, that a new drug for the treatment of multiple sclerosis had failed a clinical trial, then tipped off his son before the bad news became public. According to the indictment, Collins’s son then sold his stock, avoiding about $571,000 in losses.
What makes the allegations especially troubling is that Collins simultaneously had a seat on the House Energy and Commerce Committee, which has jurisdiction over health care companies like Innate. Even before the indictment, Collins had come under scrutiny from the House Ethics Committee for his advocacy on behalf of Innate. The new allegations of insider trading cloud what already were blurred lines between Collins’s public role and private interests.
After Collins’s arrest, Speaker Paul Ryan removed him from the committee. Collins maintains his innocence, but also announced he would drop his reelection effort.
There may be short-term political implications, since the arrest presents Democrats with an unexpected pick-up opportunity. But the case also calls attention to the dangers of letting congressmen sit on boards. Almost any company has some interest in Congressional legislation, and there shouldn’t be any questions about whose interests representatives are putting first. (According to financial disclosure forms, no members of the Massachusetts congressional delegation sit on corporate boards, although several sit on the boards of nonprofit organizations.)
Two New York representatives, Republican Tom Reed and Democrat Kathleen Rice, proposed changing the House rules to incorporate language like the Senate’s, which says that no senator “shall serve as an officer or member of the board of any publicly held or publicly regulated corporation, financial institution, or business entity.”
That change should be a no-brainer. Letting congressmen keep their foot in boardrooms might not always end in insider trading, but it’s bound to raise questions about whether elected representatives are putting the interests of their constituents first.