Whether or not Rep. Chris Collins, R-N.Y., engaged in insider trading, as federal prosecutors allege, his indictment last week exposes what a poor job Congress has done to guard against such transgressions. Collins is accused of sharing insider information about the value of a publicly traded Australian biotech company.
Collins didn’t gather the inside information in Congress — that would violate the 2012 Stock Act, which made it illegal for members and their staff to trade on privileged knowledge having to do with ongoing legislation. Rather, if prosecutors are correct, he exploited his position as a director of Innate Immunotherapeutics Ltd. In that role, in June of last year, Collins learned that disappointing results from clinical drug trials would soon drive down the value of the company’s stock.
Which brings up an obvious question: Why is a member of Congress permitted to serve as a board director of a for-profit company? What could possibly justify such a blatant conflict of interest?
After learning about the clinical trial results, Collins allegedly tipped his adult son to the news, prompting him and a cohort of others to dump their holdings in the company. Collins did not sell his own stock. By this time, he was already under investigation by the Office of Congressional Ethics in connection with his Innate Immunotherapeutics investment, which he had promoted as well to fellow members of Congress — including Tom Price, a former representative from Georgia who became, briefly, a member of President Donald Trump’s Cabinet.
Price had actively traded in various health stocks while he was in Congress, even as he chaired the House Budget Committee, where he was a leading force in Republican health care policy. Collins worked on health policy, too.
This is the stuff of klepto-republics. Being a member of Congress is an honor. It is also often a gateway to a lucrative congressional afterlife. It should not be a cash cow for members actively serving. People interested in flipping stocks should find another line of work.
The Stock Act, in addition to limiting trading on legislative information, helpfully imposed greater transparency on congressional finances. Now, Congress must establish clearer ethical parameters.
All members should be required to hold their stocks in blind trusts — in much the way modern presidents did until Trump took office. A blind trust holds assets and is managed by a trustee who neither consults with its owner nor reveals investment decisions during the person’s tenure in office.
Certainly, no sitting member of Congress should serve as a director of a for-profit company.
For too many representatives and senators, opportunities for corruption abound. It’s unfortunate that we need to restrict their ability to exploit public service for private gain. It’s also obviously necessary.
FROM AN EDITORIAL IN BLOOMBERG OPINION