The Independent View: Banning House Members from Company Boards

Rep. Chris Collins (R-27th District, Erie County NY) announced today he is Suspending his Reelection Campaign in Light of Charges of Insider Trading.

“After extensive discussions with my family and my friends over the last few days, I have decided that it is in the best interests of the constituents of NY-27, the Republican Party and President Trump’s agenda for me to suspend my campaign for re-election to Congress,” Collins said in a Press Release. He added he will continue serving the Rest of his Term and “fight the meritless charges brought against me.”

It appears that Chris Collins’ Indictment could already be the Catalyst for a Reshaping of some of Congress’ Governing Rules. Legislation introduced Thursday by Rep. Tom Reed (R-23rd District, Corning NY) and Rep. Kathleen Rice (D-4th District, Nassau Long Island), would Ban Members of the House of Representatives from Serving on Boards of Publicly-Held Companies. “We’ve gotten a lot of interest in the past 24 hours,” Reed Spokesman Will Reinert said on Friday.

Reed and Rice’s Legislation was introduced a day after Collins was Indicted by Federal Prosecutors in Manhattan on Insider Trading Charges.
Reinert said Collins’ Indictment brought more attention to the House Ethics Issue. He added that several other Congressional Offices have already asked to Read the Text of Reed and Rice’s Legislation.

In August 2016 Collins Purchased 4 Million more Shares in Innate Immunotherapeutics, making him the Largest Shareholder at that time.

In May 2017, White House Ethics Investigators "began probing Collins for his role in recruiting investors to buy stock in Innate Immunotherapeutics after several complaints were filed." Members of Congress are Explicitly Barred from Trading Stocks using Insider Information. In October 2017, the Office of Congressional Ethics (OCE) said they had "substantial reason" to believe that Collins had Improperly used his Public Office to Benefit Innate, and had forwarded Nonpublic Information to other Investors. The OCE said Collins sent Nonpublic Information to Investors about Drug Trials and that he Visited the National Institutes of Health to discuss a Drug's Clinical Trial, saying that this Violated House Ethics Rules. The House Ethics Committee did Not Appoint a Subcommittee to continue Investigating Collins' Case.

On June 22nd, 2017, the CEO of Innate Phamarceuticals sent an Email to the Company's Board of Directors, including Collins, explaining that an important Drug Trial for the Company had Failed. According to the FBI, Collins had been attending a Picnic at the White House and upon seeing the Email, immediately Phoned his Son, Cameron, and Instructed him to Sell their Shares.

Prosecutors allege that Cameron Sold some 1.39 Million Shares of Innate Stock over the course of Two days before the Clinical Trial’s Results became public, saving roughly $571,000 before the Company’s Stock Declined 92% on June 26th, 2017, after the Drug Results was announced. Cameron also told his Girlfriend and future Fiancée, Lauren Zarsky, and her Parents, Stephen and Dorothy Zarsky, about Innate’s Failed Trial, according to the Indictment. All were Innate Stockholders.

Innate, which is Headquartered in Sydney, Australia, is a Publicly-Held company. Collins “was retired” as a Director of Innate in early May.

The Senate already has a Rule like it in place, Prohibiting Sitting Members from Serving as Board Officers or Directors. Said Reed and Rice: “There should never be doubt in the public’s mind to lead them to think their Representative could be corrupted or incriminated because of their stake or position in a private company.”