More than a year after the story first broke, Rep. Chris Collins (R-N.Y.) was indicted on insider trading violations this week. Commenting on the case, Speaker of the House Paul Ryan (R-Wis.) appropriately called insider trading “a clear violation of the public trust.”
This indictment should come as no surprise. The nonpartisan, independent Office of Congressional Ethics found in October of last year that Rep. Collins violated insider trading laws and House rules with his ‘official acts’ on behalf of the pharmaceutical company, Innate Immunotherapeutics.
{mosads}But there is an additional issue that must be addressed: Why was Rep. Collins even serving on the board of a pharmaceutical company he held stock in in the first place?
A member of Congress’ first responsibility is to the public and their constituents to make the best possible decisions on their behalf. The responsibility of a board member of a corporation is a fiduciary one; that is, to maximize profit. These two roles cannot coexist without creating conflicts of interest, as the case of Collins, who also apparently spent work hours to successfully induce other members of Congress to invest in the company, clearly shows.
This type of activity should be prohibited. And, in fact, it already is in the Senate.
Senate ethics rules recognize the inherent potential for conflicts, saying in Rule 27.6(a) of its ethics manual that members of the body are barred “from serving as officers or members of the board of any publicly held or publicly regulated corporation, financial institution, or business entity.”
In light of Collins’ indictment, the House needs to take swift action on a similar rule, and there is already promising bipartisan momentum to do so.
We at Issue One were happy to work with Reps. Tom Reed (R-N.Y.) and Kathleen Rice (D-N.Y.) to address this problem, and commend them for their quick leadership to introduce a resolution to prohibit U.S. representatives from serving on the boards of publicly-held companies. The House should move expeditiously to adopt this bipartisan rule.
However, it is important to note that the Senate’s rule is not perfect. It contains a provision that allows senators to sit on 501(c) boards.
The IRS has been abysmal at enforcing appropriate restrictions on the political activities of these types of groups. The reality is that “dark money” groups, formed as 501(c) organizations, are raising and spending money to influence the impact of U.S. politics. They currently could have a sitting senator or U.S. representative on their board. That is both unwise and creates the appearance of a conflict, which erodes the public’s trust.
Given how “social welfare” groups — and even 501(c)(3) organizations that are not supposed to engage in any electoral activity — have increasingly pushed the envelope of what is permissible, this provision, while perhaps understandable in the past, is no longer sufficient to ensure voters’ faith in the institution of Congress. Neither body should have this exception in its rulebook.
Rep. Collins is being prosecuted on a variety of charges, including violating the STOCK Act, which bans insider trading by members of Congress. It is therefore also appropriate, once the dust settles on Collins’ trial, to use the lessons learned from his prosecution to revisit the STOCK Act and explore ways it can be strengthened.
At a time when confidence in democracy and our institutions is perilously low, it is simply jaw-dropping that House rules allow members of Congress to engage in this kind of clear conflict of interest.
Congress must take quick, decisive action to ensure such glaring ethical loopholes are closed.
Meredith McGehee is the executive director of Issue One. She worked on Capitol Hill and advocated for democracy reforms for more than 30 years. She also serves as a strategic adviser to the Campaign Legal Center.