What do you call it when a sitting member of Congress drafts legislation, which passes and then results in a direct personal financial gain? I call it “Corruption 101” and it’s the stuff that 3rd world kleptocracies are made of.
On Thursday, Washingon ethics watchdog Public Citizen released a letter to the Office of Congressional Ethics and the Securities & Exchange Commission alleging that Republican Representatives Tom Price and Chris Collins (NY-27) may have acted unethically and engaged in possible insider trading.
According to Public Citizen and its analysis of news reports and financial disclosures, Collins is a “prolific trader of health care investments on the stock market.” Collins, a member of the House Energy and Commerce Subcommittee on Health, is a board member and the largest shareholder of a major biotech company, Australia’s Innate Immunotherapeutics Limited – a company in which both Price and Collins made major stock purchases within days of each other, according to financial disclosure reports.
“Collins purchased 4 million shares in August in the company whose board he sits on, and Price followed up with his own major stock purchase in the company two days later,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “The stock value doubled in the three months following their investments. That’s quite good luck. This is worthy of investigation to determine whether any wrongful conduct occurred.”
Price is alleged to have traded over $300,000 worth of stocks in about 40 health care companies while “sponsoring and advocating legislation that could potentially affect” the value of those stocks. The Wall Street Journal says that since 2012, Price sponsored 9 and co-sponsored 35 bills in the House that could have resulted in direct, personal financial gain. In August, Price bought between $50,000 — $100,000 in Innate Immunotherapeutics, the value of which has since doubled.
Price is President-Elect Trump’s nominee to be the director of the Department of Health and Human Services, and Collins is the Trump transition’s Congressional liaison. Public Citizen bills itself as “protecting democracy from corporate greed.”
Since passage of the STOCK Act in 2012, members of Congress have been subject to the same laws against insider trading that apply to everyone else. Additionally, congressional ethics rules warn members to avoid substantial conflicts of interest that may cast aspersions on the integrity of their office. Rules also mandate that members may not use their office for personal gain. Public Citizen’s letter asks that the OCE and SEC investigate the stock trading activity of Price and Collins for potential violations of insider trading laws and conflict of interest rules and regulations.
“Extensive stock trading activity in industries that Price and Collins oversee as congressmen, and unusually good timing and financial benefits of those stock trades, raise red flags about the potential use of insider information,” said Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division. “The public information available falls short of hard evidence of insider trading, but the patterns of trading activity certainly warrant further investigation to determine if it occurred.”
The letter specifically asks,
These patterns of extensive trading activity in businesses and industries that Reps. Price and Collins oversee in their official capacity, and the beneficial timing of these trades, raise legitimate questions concerning both potential insider trading and conflicts of interest. Some ofthese questions include:
- Did Price and Collins have access to nonpublic material information accounting for adoubling in value of their investments in Innate Immuno? Collins sits on the board of thecompany, a company which is placing its bets on an experimental drug currently inclinical trials, and both members of Congress made substantial purchases in the company’s stock at almost the same time.
- Does pharmaceutical and health care legislation sponsored by Price and Collins run afoulof conflicts of interest concerns in that the legislation could directly and substantially benefit the lawmakers’ own investments beyond the benefit to the public generally? These legislative vehicles could well produce windfall profits for Price and Collins
Innate Immuno’s chief executive, Simon Wilkerson, said at investor presentations this year that its future depends on an experimental drug to treat an advanced form of multiple sclerosis, which is currently in clinical trials.
One law enacted this month that could benefit Innate Immuno is the 21st Century Cures Act, which authorizes spending $6.3 billion for medical research, including $500 million for the FDA to speed up drug approvals.
A key provision that would permit clinical trials of new medical treatments to proceed more quickly was written by Mr. Collins as a member of the health panel of the Energy and Commerce Committee…
…[Collins told the Buffalo News that] his authorship of legislation wasn’t a conflict of interest, but rather an instance of bringing his business knowledge to the Congress.
A spokesman for Mr. Collins said he used his business experience and meetings with patients and regulators to write legislation that “will put patients first and get cures more quickly to those who need them most.” The statement added that Mr. Collins “has followed all ethical guidelines related to his personal finances.”
Both Mr. Price and Mr. Collins voted yes for the bill’s final House vote in November, just three months after they bought more stock in the company.
In August 2015, Collins bought between $500,000 and $1 million worth — 4 million shares — of Innate Immuno stock. Collins was an author of a law that has a direct positive benefit on that investment and Collins’ wealth, but dismissed these concerns to the Buffalo News. The value of that stock doubled after passage of that law. Collins has relentlessly pushed for repeal of a tax on medical devices, which would have a direct benefit on two of his stock holdings.
Earlier this week, House Republicans held a secret vote with no advance warning that would have changed congressional rules and effectively abolish the Office of Congressional Ethics. Public outcry and a Tweet from the President-elect quickly prompted the Republican majority to abandon this first, tone-deaf act of the new Congress. As of this writing, no one knows how Collins voted. Ask him on Facebook, Twitter, or at