Last year, the issue of ethics in Congress took center stage as Rep. Chris Collins (NY-27) and now former HHS Secretary, Tom Price (previously Rep. for GA-6) were accused of questionable stock purchases, sharing of information, and voting on policies that would positively affect those companies (https://newrepublic.com/minutes/139951/tom-price-already-screwed-insider-trading-defense).
2012’s Stock Act (The Stop Trading on Congressional Knowledge Act), which was signed into law by Pres. Obama on April 4, 2012, was designed to stop insider trading among members of Congress and, specifically, stated that they are “not exempt from insider trading prohibitions” (https://www.congress.gov/bill/112th-congress/senate-bill/2038). In addition, the act: “Amends the Ethics of Government Act of 1978 (EGA) to require specified individuals to file reports within 30 to 45 days after receiving notice of purchase, sale, or exchange which exceeds $1000 in stocks, bonds, commodities futures, and other forms of securities and subject to any waivers and exclusions.”
Sadly, this law hasn’t curbed the ethical issues among lawmakers as Politico found in their May 14, 2017 piece, “Reckless stock trading leaves Congress rife with conflicts.” (https://www.politico.com/story/2017/05/14/congress-stock-trading-conflict-of-interest-rules-238033). They discovered “a handful of lawmakers, some of them frequent traders and some not, disproportionately trade in companies that also have an interest in their work on Capitol Hill.”
Politico detailed several lawmakers, including Rep. Chuck Fleischmann (TN-3), who had engaged in questionable stock purchases. In October 2015, V.P. Biden announced his plans for “Cancer Moonshot,” which was a program designed to advance cancer research and care between the public and private sectors. On January 12, 2016 during his State of the Union address, Pres. Obama formally announced this agenda. On 6/21/16, Rep. Fleischmann purchased $1000-$15,000 in stocks from Celgene, a cancer research company. On 6/28/16, the program Patents 4 Patients was implemented to fast-track cancer immunotherapy drugs. Then on 8/18/16, Rep. Fleischmann purchased $1000-$15,000 in stock from another cancer research company, Juno Therapeutics. On 12/13/16 the 21st Century Cures Bill was signed into law that incorporated “Cancer Moonshot.” After this, Rep. Fleischmann sold his stock in Juno Therapeutics on December 21, 2016.
The Patents 4 Patients program was extended until 12/31/18 due to its popularity. Besides the companies that Politico noticed, I found that Rep. Fleischmann purchased stock in Amgen, who is currently working on cancer immunotherapy research (https://www.amgenscience.com/immuno-oncology-research/ ), on 4/5/17 and 9/6/17 for $1000-$15,000 transactional amounts. Amgen Inc. PAC donated $1000 to his campaign on 8/8/14. On May 27, 2015 Juno Therapeutics and Editas Medicine announced that they would be working together on new “therapies to treat cancer.” (http://ir.editasmedicine.com/phoenix.zhtml?c=254265&p=irol-newsArticle&ID=2125229 ). Fleischmann recently purchased stock in Editas Medicine Inc on 11/17/17 for $1000-$15,000. Editas Medicine does research into gene editing (http://www.editasmedicine.com/areas-of-research/cancer).
I noticed that Novo Nordisk PAC contributed $1000 to his campaign on 10/18/16 and he purchased stock in the company on 12/21/16 for $1000-$15,000 transactional amount. As of this writing, the house clerk’s page does not list this stock as being sold.
Politico quoted Rep. Fleischmann as stating, “In regard to my stocks, I treat my investments like a blind trust and was unaware of the transaction since my financial adviser makes the transactions.”
Actually, though, Politico reports that there is a “correct method to set up a blind trust”:
“It requires hiring a manager for the trust, drawing up paperwork and submitting it to the House or Senate ethics committee. Once the blind trust is approved, the trustee takes over the fund and, over time, makes decisions on buying and selling assets. The lawmaker doesn’t participate at all.”
After perusing Rep. Fleischmann’s stock purchases (http://clerk.house.gov/public_disc/financial-search.aspx) and his list of campaign donors (https://www.fec.gov/data/receipts/?two_year_transaction_period=2018&data_type=processed&min_date=01%2F01%2F2017&max_date=01%2F06%2F2018), I found more intriguing stock purchases and donors.
On March 9, 2017, he purchased $1000-$15,000 in Acadia Healthcare stock, which is a company that provides private treatment for substance abuse and mental health problems. Acadia Healthcare contributed $2500 to his campaign on 10/6/16 and $1000 on 7/25/17. Democratic challenger, Dr. Danielle Mitchell, highlighted on social media her questions regarding Rep. Fleischmann investing in Acadia Health and receiving campaign donations on 8/6/17. He then sold his shares in Acadia on 8/17/17. It is unknown if this is due to Dr. Mitchell’s questioning of this stock ownership.
On 8/29/17, he purchased $1000-$15,000 in stock from Cardinal Health, a pharmaceutical distributor. Cardinal Health has received much publicity recently due to a failure to properly document and alert the DEA of suspicious orders of narcotics by pharmacies in Florida, Maryland, and New York. On January 11, 2017, The Washington Post, reported that Cardinal Health was fined $44 million for these delinquencies. Also, in 2008, Cardinal Health was fined $34 million for “similar allegations at seven warehouses around the United States.” (https://www.washingtonpost.com/national/health-science/cardinal-health-fined-44-million-for-opioid-reporting-violations/2017/01/11/4f217c44-d82c-11e6-9a36-1d296534b31e_story.html?utm_term=.d69a8c9e761c). Besides The Washington Post, Reuters reported this issue on 12/23/16 and Investopedia had an article on 1/13/17.
A 60 Minutes piece that aired on 10/15/17 exposed, via interviews with former DEA employees, that Cardinal Health was one of several drug distributors, who knowingly flouted the federal reporting law that requires them to report suspicious orders of narcotics to the DEA. For example, Kermit, WV has a population of 390 people and one pharmacy ordered 9 million hydrocodone pills over two years, which is 50 times the normal pharmacy purchase. During the interview, former DEA agent, Joe Rannazzisi, said that the distributors “allowed millions and millions of drugs to go into bad pharmacies and doctors’ offices, that distributed them out to people who had no legitimate need for those drugs.” The 60 Minutes interview also stated:
“A distributor’s representative told us the problem is not the distributors but doctors who overprescribe pain medication, but the distributors know exactly how many pills go to every drug store they supply. And they are required under the Controlled Substances Act to report and stop what the DEA calls ‘suspicious orders’ – such as unusually large or frequent shipments of opioids. But DEA investigators say many distributors ignored that requirement.”
In 2011, Cardinal Health went on the offensive with the DEA. According to Rannazzisi, their attorneys persuaded the DEA to “take a softer approach” in their investigations and prosecutions. In 2013, he noticed that it was much more difficult to bring a case to trial.
More alarmingly, the drug industry lobbied Congress for “legislation that would destroy the DEA’s enforcement powers.” They were able to accomplish this with the “Ensuring Patient Access and Effective Drug Enforcement Act” ( https://www.congress.gov/bill/114th-congress/senate-bill/483) a.k.a. “The Marino Bill” that passed the Senate and House with no objections and was signed into law on 4/19/16. In addition, Linden Barber, who used to work for the DEA, but left and started working for drug companies facing investigation, wrote the bill and then was hired by Cardinal Health as senior vice president.
Former Attorney General, Eric Holder, and DEA chief Administrative Law Judge, John J. Mulroney, warned that this law would be make it nearly impossible to prosecute distributors. To view the entire article and 60 Minutes episode, please go to: https://www.cbsnews.com/news/ex-dea-agent-opioid-crisis-fueled-by-drug-industry-and-congress/.
On 11/16/17, Cardinal Health issued an “Action Program” to “Support Drug Abuse Prevention and Education in Appalachia” by purchasing Narcan and distributing it for free, increasing its drug take back program, investing $3 million in addiction prevention, and to partner with Brown University’s Medical School to share curricula that addresses opioid misuse. (http://ir.cardinalhealth.com/news/press-release-details/2017/Cardinal-Health-Launches-Opioid-Action-Program-to-Support-Drug-Abuse-Prevention-and-Education-in-Appalachia/default.aspx)
Despite his stock ownership in Cardinal Health, Rep. Fleischmann has issued a statement on 10/26/17 that he supports President Trump declaring the opioid epidemic a health emergency and said that in 2016, 1,186 people died in Tennessee from opioid overdoses (https://fleischmann.house.gov/media/press-releases/statement-opioid-epidemic-needs-our-national-attention).
As of this writing, the house clerk’s website has no record of him selling his stock in Cardinal Health.
Another area of stock purchases that involved legislative matters is with telecommunications companies. He purchased stock in Verizon on 3/10/17 for a $1000-$15,000 and Viacom on 9/8/17 for the same amount. On 12/13/17, he was one of 107 congressmen, who signed a letter to the FCC requesting a repeal of net neutrality, as reported by Motherboard. In their article, they also noted that he received “42,00” (Note: They appeared to either have left off a zero or put the comma in the wrong place as I found a $1000 contribution by AT&T PAC on 9/29/17). You can read their article by going to this site, https://motherboard.vice.com/en_us/article/7xwknx/republican-members-of-congress-fcc-letter.
He also purchased stock in British Petroleum on 9/23/14 and 8/27/14 for $1000-$15,000 transactional amounts and Royal Dutch Shell on 1/9/15 for $1000-$15,000, but sold shell on 7/15/15. He has bought and sold index fund, Select Spector SPDR Tr Energy (most recent purchases on 1/9/17, $1000-$15,000 and 10/26/17, $1000-$15,000), who invests in “companies in the oil, gas, consumable fuel, energy equipment, and services industry.” (https://us.spdrs.com/etf/energy-select-sector-spdr-fund-XLE). In addition, he has received campaign contributions from Westinghouse (9/28/17, $1000), Southern Gas Co. PAC (8/25/17, $1000), Centrus Energy Corp. PAC (8/21/17, $1000), Duke Energy Corp. PAC (6/26/17, $1000), Nuclear Energy Institute Federal PAC (9/27/16, $1000), Centrus Energy Corp. PAC (9/27/16, $500), Coal PAC (9/27/16), $1000), and Centrus Energy Corp. PAC ($10/14/14, $1000).
Recently, Rep. Fleischmann voted “yes” to opening the outer continental shelf to oil drilling, voted “yes” to stop the EPA from regulating greenhouse gases, and he co-sponsored the “Federal Land Freedom Act,” which would allow states to lease energy rights on federal lands (http://www.ontheissues.org/House/Chuck_Fleischmann_Energy_+_Oil.htm).
In his media page, Rep. Fleischmann explains that he is pro-energy independence and supports an “all of the above strategy using renewable sources such as wind, solar, hydropower, and geothermal energy.” (https://fleischmann.house.gov/issues/energy)
Finally, as citizens and voters of the United States, we must ask ourselves, “How do we hold our lawmakers accountable to work in an ethical manner in regards to stock purchases, to act in we the people’s interests on policy decisions, and not operate only in a corporation’s interests?” Even though, Citizens United gave companies the ability to spend money in campaigns under the protections of the 1st Amendment, we must be vigilant in holding lawmakers accountable by checking their campaign donations and stock purchases. If the Office of Congressional Ethics doesn’t hold them accountable, we must by voting them out of office. Plus, it appears to me that the best solution for the stock purchase quagmire is to bar lawmakers from buying and selling stocks and to only allow them to invest in mutual funds.