House Republicans and Democrats introduced a resolution on Tuesday that would ban the chamber’s lawmakers from sitting on the boards of publicly traded companies, an ethics measure that responds to the criminal indictment of Rep. Chris Collins earlier this month.
Collins (R-N.Y.) was the chairman of Innate Immunotherapeutics, a pharmaceutical firm based in Australia that has pursued a novel treatment for multiple sclerosis. Federal prosecutors allege that Collins, while attending a White House event, leaked confidential information about the failure of a crucial drug trial to his son, allowing family members to avoid nearly $800,000 in losses by selling their stakes before the results were made public.
Under current House rules, there is no prohibition on a lawmaker serving on a corporate board as long as the position is uncompensated.
“I thought to myself, how is it even possible that he is sitting on that board?” said Rep. Kathleen Rice (D-N.Y.). “It not only poses enormous risks for conflicts of interest, but I think it’s just another example of why the public’s faith in their institutions have been so undermined.”
The measure, written by Rice and Rep. Tom Reed (R-N.Y.), would bring House rules in line with Senate restrictions dating to 1991, which bar a member of that chamber from serving on the board of any “publicly held or publicly regulated corporation, financial institution, or business entity.”
While the Senate rules include a grandfather provision for members who served on corporate boards at least two years before election, the House bill makes no such exception.
“Taking them off the boards is a common-sense type of thing that most Americans I think would expect us to be doing anyway,” Reed said in an interview.
The measure, however, stops short of instituting a ban on lawmakers serving on the boards of privately held for-profit companies, as well as nonprofits’ boards.
Craig Holman, government affairs lobbyist for the watchdog group Public Citizen, said the Reed-Rice measure is “certainly an improvement” over the status quo but said a more wide-ranging ban on board service would be preferable.
“The exact same conflict-of-interest issues are raised by lawmakers serving on the boards of these other entities,” he said.
According to financial disclosure statements filed this year, at least 97 House members reported having some role in a for-profit firm, whether as an investor, partner, officer or board member. But those firms appear to be privately held and would not be covered by the proposed restrictions.
Neither Reed nor Rice said they knew of a sitting member who would have to step down from an existing corporate directorship should their measure pass.
Meanwhile, 139 sitting House members reported holding board positions in nonprofits, including family foundations, academic institutions and community service groups.
Nonprofits have posed ethical pitfalls for some lawmakers. Former congresswoman Corrine Brown (D-Fla.), for instance, was convicted in 2017 of using a nonprofit as a personal slush fund. Brown, however, did not serve on its board or report involvement with the group on her financial disclosure filings.
Reed and Rice said they debated how far to go in cracking down on lawmakers’ participation in for-profit firms and, though they personally supported broader restrictions, they concluded that matching the Senate standard would be an obvious and appropriate first step.
“I think it’s appropriate for us to say to those future members, that when you come to Congress, the full-time devotion and commitment has to be to doing the public job,” Reed said.
“There’s a lot of work to be done about privately held companies. There’s a lot of work to be done about nonprofits,” Rice said, adding that a broader bill would probably mean fighting through more objections from fellow lawmakers. “I can’t imagine one of them saying no to this.”
Collins was at one time the largest shareholder in Innate, which is traded on the Australian Securities Exchange and in the U.S. over-the-counter market, and several of his House colleagues followed him with investments in the firm. He stepped down from Innate’s board of directors in May. According to his most recent financial disclosure report, Collins also serves as a director of four other companies, none of which are publicly traded.
Collins has called the allegations against him “meritless” and has suspended his reelection campaign to focus on fighting the charges. It remains unclear whether he will be able or willing to vacate the Republican nomination for his seat ahead of the Nov. 6 election.
Among those who have called for a crackdown on lawmakers’ board service is House Minority Leader Nancy Pelosi (D-Calif.), who is seeking to make Collins’s arrest part of a midterm anti-corruption pitch.
“Members of Congress should certainly not be sitting on boards of companies, especially those who are impacted by policies in the government,” she said in an Aug. 12 MSNBC interview.