Government accountability groups are backing a resolution, to prohibit members of Congress from serving on the boards of publicly held companies.
In response to the indictment of their fellow New Yorker Chris Collins, the pair introduced a measure to create a House version of Senate Rule 37.6(a), which states 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.”
Collins was arrested Aug. 8 on charges of insider trading and securities fraud related to an Australian biotechnology company, Innate Immunotherapeutics. Collins is the company’s largest shareholder and serves on its board of directors. The indictment alleges that Collins passed nonpublic information about Innate’s drug trial results to his son to help him “make timely trades in Innate stock and tip others.”
In total, the three defendants in the Collins avoided “over $768,000 in losses that they would have otherwise incurred” had they sold their stock after the information was made public, according to the indictment.
“Members of Congress are public servants whose primary responsibility is to work on behalf of their constituents and the public. The responsibility of a corporate board member is to increase profit for the corporation. The same person cannot hold these two roles without creating conflicts of interest,” said the letter, which was sent to lawmakers earlier this week.
The groups behind the letter, including the League of Women Voters of the United States, Business for America and the Sunlight Foundation, urged lawmakers to make a “common-sense and much-needed change.”
Reed told Roll Call on Wednesday he had not yet talked to leadership about the bill but that was in the works. He predicted it likely wouldn’t move as a standalone measure this year but that it could be incorporated into a House rules package that would be brought to the floor at the start of the new Congress in January.
“That is the right time and ripe time to do it,” Reed said. “I mean we’ve got a lot of rule changes to do. This at least teed up the conversation while going into the appropriate time to get it done.”
Lindsey McPherson contributed to this report.