After a member of Congress was arrested for insider trading for a company he served on the board for, should the practice of board memberships for House members be banned?
Rep. Chris Collins (R-NY27) was arrested and is currently under indictment for insider trading. However, the charges haven’t stopped Collins from running for reelection. He served on the board of directors of a biotechnology company called Innate Immunotherapeutics Limited, and was their largest shareholder at 17% of shares.
Yet while senators are prevented from serving on the board of a publicly traded company, with a few very narrow exceptions, no similar prohibition exists in the House.
What the bill does
H. Res. 1043 would prevent House members from serving on the board for a publicly traded company while in office. (The bill doesn’t have an official title.)
An exception is allowed for boards of nonprofits, such as charities or philanthropic organizations. Another exception is allowed if the board position doesn’t offer compensation, under the logic that there would be no financial conflict of interest in that case.
It was introduced in the House on August 21 by Rep. Kathleen Rice (D-NY4).
What supporters say
Supporters say the bill prevents conflicts of interest among elected representatives, strengthening the perception that they’re working more on behalf of their constituents rather than for private interests.
“There is no reason why Members of Congress should ever be allowed to serve on the boards of publicly-traded companies,” Rep. Rice said in a press release. “If we want to maintain the public’s trust in Congress, then we need to change our rules and close gaping ethics loopholes like this one.”
“Our constituents should never have a doubt in their mind that their Representative could be corrupted, incriminated or conflicted because of their financial interests or their position in a private company,” Rice continued. “The Senate addressed this loophole nearly 30 years ago and a House measure is long overdue.”
What opponents say
Opponents say that existing laws against insider trading should already suffice to prevent bad behavior, rather than preventing such board memberships entirely. (Rep. Collins, not to put too fine a point on it, was caught after all. The FBI had recordings of him doing the insider trading from the White House lawn.)
“Stan Brand, senior counsel at the Washington law firm Akin Gump and former general counsel to the House, said the strength of the laws against insider trading should allay fears about corporate board service by lawmakers,” an Associated Press article noted. “It’s irrelevant whether members serve on boards, he said. It’s what they do with sensitive information that counts.
Odds of passage
The bill has attracted 42 bipartisan House cosponsors: 32 Democrats and 10 Republicans. It awaits a potential vote in the House Rules Committee.