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Reed proposes banning House members from company boards

It appears that Chris Collins’ indictment could already be the catalyst for a reshaping of some of Congress’ governing rules.

Legislation introduced Thursday by Rep. Tom Reed, R-Corning and Rep. Kathleen Rice, a New York City-area Democrat would ban members of the House of Representatives from serving on boards of publicly-held companies.

“We’ve gotten a lot of interest in the past 24 hours,” Reed spokesman Will Reinert told The News on Friday.

Reed and Rice’s legislation was introduced a day after Collins, a Clarence Republican, was indicted by federal prosecutors in Manhattan on insider trading charges.

Reinert said Collins’ indictment brought more attention to the House ethics issue. He added that several other congressional offices have already asked to read the text of Reed and Rice’s legislation. He declined to say which offices could be future co-sponsors.

Collins, a former longtime director of the Australia-based Innate Immunotherapeutics company, is accused of sharing nonpublic results of a failed drug trial on June 22, 2017 with his son, Cameron.

Prosecutors allege that Cameron, a major investor in Innate like his father, sold some 1.39 million shares of Innate stock over the course of two days before the clinical trial’s results became public, saving roughly $571,000 before the company’s stock declined 92 percent on June 26, 2017, after the drug results was announced.

Cameron also told his girlfriend and future fiancee, Lauren Zarsky, and her parents, Stephen and Dorothy Zarsky, about Innate’s failed trial, according to the indictment. All were Innate stockholders.

Innate, which is headquartered in Sydney, Australia, is a publicly-held company. Collins “was retired” as a director of Innate in early May, the company said in a statement Wednesday.
The Senate already has a rule like it in place, prohibiting sitting members from serving as board officers or directors.

Said Reed and Rice: “There should never be doubt in the public’s mind to lead them to think their Representative could be corrupted or incriminated because of their stake or position in a private company.”

Here's how prosecutors say Chris Collins' insider trading unfolded

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