Member of corporate board, Congress? It's not prohibited
WASHINGTON — The indictment of Rep. Chris Collins on insider trading charges is drawing new attention to the freedom members of Congress have to serve on corporate boards or to buy and sell stock in industries they’re responsible for overseeing.
Collins, a New York Republican, has denied any wrongdoing stemming from his involvement with Innate Immunotherapeutics Limited, a biotechnology company based in Sydney, Australia. He was Innate’s largest shareholder, holding nearly 17 percent of its shares. He also was a member of the company’s board of directors — an arrangement that itself isn’t a violation of the law. Yet it’s a connection that can create the potential for conflicts of interest.
Members of Congress are not prohibited from serving on corporate boards as long as they don’t receive any compensation for doing so.
The thinking behind this exception, which doesn’t extend to top-level executive branch officials, is to ensure that lawmakers aren’t prevented from accepting positions on the boards of charities or other philanthropic organizations, according to Craig Holman of the nonpartisan advocacy group Public Citizen.
Holman, who lobbies in Washington for stricter government ethics and lobbying rules, noted that lawmakers are often privy to sensitive information before it becomes public. That makes the opportunity for insider trading “very prevalent,” he said.
“My own office was stunned” by Collins’ position, said Holman. “`Really, they can sit on a board of directors?”’
Government ethics lawyer Kathleen Clark said another downside of permitting members of Congress to be on corporate boards is that they may feel a sense of loyalty to the business, spurring them to share information with the company they obtained through government service.
Clark, a law professor at Washington University in St. Louis, also challenged the notion that service on non-commercial organizations is inherently altruistic and doesn’t come with potential conflicts of interest. Even nonprofits can have an interest in seeing particular legislation passed, she said.
“In almost every situation, the ethics standards members of Congress impose on themselves are more lax than what they require of high-level executive branch officials,” Clark said.
Collins was arrested Wednesday and charged with conspiracy, securities fraud, wire fraud and making false statements to the FBI. Parallel charges were filed against two other people, including Collins’ son.
