WASHINGTON – You might think members of Congress would take it as a warning if they saw a fellow lawmaker – Rep. Chris Collins, R-Clarence – lambasted by good-government types after he passed on to a colleague a hot stock tip about an obscure Australian biotech firm.
But no. Instead, four other Republican lawmakers bought stock in the same company amid the controversy early this year surrounding Collins' investment.
Those lawmakers – Reps. Mike Conaway and John Culberson of Texas, Doug Lamborn of Colorado and Billy Long of Missouri – bought shares in Innate Immunotherapeutics.
That's the biotech firm that Collins – the firm's largest shareholder – last year touted to then-Rep. Tom Price, a Georgia Republican.
Price's discount purchase of Innate stock became a controversial issue in the confirmation process that led to him becoming President Trump's health and human services secretary.
In addition, the Office of Congressional Ethics is investigating Collins' investment in Innate and has staffers in Buffalo this week interviewing those whom Collins persuaded to invest in the company.
Politico reported earlier this week that the four GOP lawmakers invested in Innate while controversy was swirling around the company in January.
That fact disheartened Donna M. Nagy, executive associate dean and C. Ben Dutton professor at the Indiana University Maurer School of Law.
"It's tremendously disappointing," she said.
She said it appears that some lawmakers saw the controversy surrounding Collins and Price not as a cautionary tale, but as an investment opportunity.
Several of those lawmakers began buying stock in Innate on Jan. 24, the very day the Washington Post published Nagy's op-ed calling for a law barring lawmakers from buying individual stocks. Citing public disclosures of stock purchases, Politico said another Republican lawmaker, Rep. Markwayne Mullin of Oklahoma, also bought Innate stock, but did so before the dust-up over the Collins and Price investments.
Unlike Collins and Price, those lawmakers bought Innate stock at its market price, not at a discount in a private stock placement.
But at the same time, all those lawmakers have to vote on legislation that affects the pharmaceutical industry. Nagy said that means they not only bought stock, but they also bought a potential conflict of interest.
Conaway said his investment team was responsible for his stock purchases.
"We have professional traders who make trades either on their own, because they have the authority, or with my wife," he told Politico.
And spokespeople for the other lawmakers who bought Innate stock insisted they did nothing wrong.
Jarred Rego, a spokesman for Lamborn, told Politico that the lawmaker bought Innate stock "on the open market, at fair market value, after all the media discussion about the company."
Hannah Smith, a spokeswoman for Long, told Politico: "Congressman Long did not learn of Innate Immunotherapeutics through a colleague, but rather through the news in January when the company became a daily topic."
And Emily Taylor, a spokeswoman for Culberson, told Politico that the lawmaker bought the stock for the same noble reason that Collins' spokespeople have cited as the motivation for his interest in Innate: the company's search for a cure for secondary progressive multiple sclerosis.
"Rep. Culberson has a lifelong friend with multiple sclerosis and is always looking into news stories and breakthroughs on MS treatments," Taylor said.
Similarly, in response to questions about the Office of Congressional Ethics investigation into Collins' investments in Innate, his spokesman, Michael Kracker, said: "He (Collins) is very proud of the progress the company has made over the years and hopeful it will develop a potentially life-saving treatment for the millions of individuals suffering from secondary progressive multiple sclerosis.”
Kracker also insisted Collins did nothing wrong in buying Innate stock at a discount last year and recommending that Price, now the HHS secretary, do the same.
“Despite the continued partisan attacks insinuating otherwise, Congressman Collins has followed all ethical guidelines related to his personal finances during his time in the House and will continue to do so,” Kracker said.
Democratic Congressional Campaign Committee spokesman Evan Lukaske mocked Collins' statement earlier this year just off the House floor, when the congressman was heard bragging about “how many millionaires I’ve made in Buffalo" in recent months.
“Representative Collins may have made ‘many millionaires’ with his stock tips, but it’s possible he violated federal law if he used his elected office to financially benefit himself and other members of Congress,” Lukaske said. “Their constituents deserve answers about this potentially illegal and unethical behavior.”
The DCCC is targeting Collins for defeat in the 2018 election.
Politico noted that some of the lawmakers who invested in Innate are in a position to have particular influence over legislation affecting pharmaceutical companies.
Long, like Collins, is a member of the subcommittee overseeing health policy. And Conaway is a deputy whip, partly responsible for lining up votes for legislation on the House floor.
Yet their stock trades are nothing unusual. Politico found 28 House members and six senators who each had traded more than 100 stocks in the past two years, often despite possible conflicts of interest.
For example, Sen. Sheldon Whitehouse, D-R.I., is a heavy investor in pharmaceutical stocks even though he serves on the committee overseeing health care. Sen. Patty Murray, D-Wash., serves on that same committee, and in March she and her husband invested in a number of stocks, including four major pharmaceutical firms.
To hear Nagy tell it, there is only one way to prevent such potential conflicts of interests from happening in the future.
"The only solution I see is new legislation that would prohibit members of Congress from owning any security other than shares in mutual funds or government securities," she said. "A divestiture requirement is the only way to solve these conflicts."