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Chris Collins insider trading case could prompt House ethics crackdown

WASHINGTON – One of Rep. Chris Collins' last imprints on Congress could be tougher ethics legislation.

Republicans and Democrats alike are discussing new ethics rules of varying sorts, with one possibility being a narrow measure – blocking House members from sitting on corporate boards – this fall, and a broader ethics effort next year.

Good government groups are pushing for a broader measure: One that would ban lawmakers from directly owning stocks.

The parameters of any ethics legislation remain unclear, because the House is out of session until after Labor Day. But there appears to be bipartisan sentiment for some sort of a move on ethics – thanks to Collins' indictment.

"Given the nature of the circumstances that brought this to light, I think there's going to be some interest in improving the ethics rules to make them even better than they are today," said Rep. Tom Reed, a Corning Republican close to House leadership who is pushing an effort to bar lawmakers from boards of public companies.

Democrats are going farther, making an ethics crackdown part of their campaign platforms and promising large-scale reforms, without yet offering many specifics.

"A Democratic majority will swiftly act to pass tougher ethics and campaign finance laws and crack down on the conduct that has poisoned the GOP Congress and the Trump Administration," House Minority Leader Nancy Pelosi, a California Democrat, said in a letter to her colleagues last week.

Federal prosecutors in New York last week indicted Collins on 11 felony counts resulting from an alleged chain of illegal insider stock trades that the Clarence Republican allegedly started with a cellphone call from the White House lawn during last June's congressional picnic. Collins' son, Cameron, and Cameron Collins' prospective father-in-law, Stephen Zarsky, of New Jersey, face similar charges.

Prosecutors alleged that Chris Collins illegally shared inside information about Innate Immunotherapeutics, an Australian biotech company where the congressman served on the board for years until this spring.

In response to the Collins case, Reed and Rep. Kathleen Rice, a Democrat from Garden City in Nassau County, announced last week that they will introduce a bipartisan resolution barring lawmakers from serving on corporate boards.

"I do believe there's support for these reforms," Reed said.

Noting that U.S. Senate rules have for many years barred senators from serving on corporate boards, Reed said: "It makes sense to mirror the Senate position in the matter."

He's not alone in thinking that.

"This case has highlighted the absurd policy that somehow permits sitting members of the House to also serve on corporate boards of directors," said Robert Galbraith, senior research analyst at Buffalo's Public Accountability Initiative and one of the first researchers to delve into Collins' investments. "I can't count how many reactions to Collins' arrest I've seen saying essentially: 'How was this even possible?' "

Craig Holman, government affairs lobbyist for Public Citizen's Congress Watch, said he is working with Pelosi's office on a similar effort to bar House members from corporate boards.

Such a measure would likely have limited impact. A Buffalo News study last year revealed that of the 435 members of the House, Collins was the only one to serve on a corporate board. And with him no longer serving on Innate's board and suspending his campaign for re-election, any move to bar lawmakers from corporate boards would largely block congressmen from doing something they don't normally do anyway.

Amid ethics probe, Collins maintains his business interests

Holman is also working with Pelosi's office to try to develop a broader reform package. One possible provision would restore provisions to the STOCK Act – ethics legislation sponsored by the late Rep. Louise M. Slaughter, a Fairport Democrat – the Republican Congress removed.

The STOCK Act now requires lawmakers to report their stock transactions within 45 days, but the reports are PDF files that are difficult to search and put into any larger context.

"That's just very burdensome," Holman said.

Holman is proposing putting STOCK Act reports into a searchable database from which files could be downloaded, as was the intent in Slaughter's original version of the law. In addition, Holman is proposing a requirement that senior congressional staff report their stock transactions, given that they are often the people drafting legislation.

Democratic leaders have shown less interest in another Holman proposal: one that would subject lawmakers to investing rules similar to those imposed on executive branch officials. Such rules would, for example, bar lawmakers on the Armed Services Committee from investing in defense contracting companies.

"It's more sweeping," said Holman, one of the first people to file an Office of Congressional Ethics complaint about Collins' involvement in Innate in 2017. "It's more controversial."

But several good government advocates have suggested going one step farther and barring federal lawmakers from investing in individual stocks entirely.

Collins stands as a shining example of why such a rule would be a good idea, said Donna Nagy, executive associate dean and C. Ben Dutton Professor of Law at Indiana University.

"Representative Collins’s substantial holdings in Innate Immunotherapeutics place his legislative judgments into question: Did his multimillion-dollar investments in the company influence his legislative activity significantly, or somewhat, or not at all?" said Nagy, who has written extensively in favor of barring lawmakers from investing in individual stocks. "That very question highlights the compelling need for major conflict-of-interest reform."

Proposals to that end include restricting lawmakers to investing only in mutual funds or in forcing them to put their investments in a blind trust.

But forcing politicians to sell off their stocks when they win a seat in Congress could raise other concerns. Given that some people – like Collins – turn to politics after a successful career in the private sector, forcing them into selling off their long-term investments could deter such people from running for office in the first place.

Reed thinks it would be more fair to require lawmakers to put their holdings in a blind trust.

"The blind trust is interesting to me as a way to protect members or candidates who want to step forward into public service after long, successful careers," Reed said.

The blind trust idea also appealed to Cecily Molak, a retired lawyer and a Republican from Honeoye Falls, in Collins' district, who was one of the first private citizens to file an ethics complaint against Collins.

"At least that takes the self-interest out of it," Molak said. "Instead of thinking about their fortunes, lawmakers ought to be thinking about us."

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