New York Rep. charged with insider trading
New York Daily News
NEW YORK — Insider trading was a family affair for U.S. Rep. Chris Collins, federal prosecutors charged Wednesday.
The Republican lawmaker from New York is accused of sharing inside information about a biotechnology company with his son and the father of his son’s fiancee in a scheme that allowed them to dodge nearly $800,000 in stock losses, prosecutors say.
“Congressman Collins, who by virtue of his office helps to write the laws of this nation, acted as if the law didn’t apply to him,” said Manhattan U.S. Attorney Geoffrey Berman.
The securities fraud charges against the three men stem from Mr. Collins’ relationship with Innate Immunotherapeutics, an Australian biotech firm. Mr. Collins sits on the firm’s board of directors and is one of its largest shareholders.
Manhattan federal prosecutors say the Congress member was at a White House picnic when he tipped off his son Cameron Collins, 25, that a new multiple sclerosis drug had failed a medical trial — a crushing blow for a company whose fate rested with the medication.
Cameron Collins immediately dumped more than 1 million shares of Innate stock and passed along the news to his fiancee’s father, Stephen Zarsky, 66, and others, the indictment says.
The public announcement of the failed drug trials caused the Innate stock price to plummet 92 percent. By dumping their shares early, the Collins clan managed to skirt stock losses totaling $768,000, the indictment says.
“Congressman Collins cheated our markets and our justice system in two ways,” Mr. Berman said. “First he tipped his son to confidential corporate information at the expense of regular investors andthen he lied about it to law enforcementto cover it up.”
The three defendants surrendered to authorities Wednesday. They were arraigned in Manhattan Federal Court on a raft of charges including securities fraud, wire fraud and making false statements tothe FBI.
The trio, after pleading not guilty, were freed on $500,000 bail. Mr. Collins, 68, kept his mouth shut as he left the courthouse surrounded by a scrum of reporters and photographers, and hopped into ablack SUV.
Buffalo Mayor Byron Brown called on Mr. Collins to resign. But in a statement to his supporters, the upstate legislator vowed not to give up his seat. “As I fight to clear my name, rest assured that I will continue to work hard for the people of the 27th Congressional District of New York while remaining on the ballot for re-election this November,” it read.
Mr. Collins’ attorneys released a statement defending the Republican lawmaker earlier in the day.
“We will answer the charges filed against Congressman Collins in court and will mount a vigorous defense to clear his good name,” said lawyers Jonathan Barr and Jonathan New. “It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock. We are confident he will be completely vindicatedand exonerated.”
House Speaker Paul Ryan, soon after the charges were announced, kicked Mr. Collins off the House Energy and Commerce Committee.
“While his guilt or innocence is a question for the courts to settle, the allegations against Rep. Collins demand a prompt and thorough investigation by the House Ethics Committee,”Mr. Ryan said.
In a separate action, the Securities and Exchange Commission filed a civil complaint against Chris Collins, his son and Mr. Zarsky. The conspiracy also involved Cameron Collins’ fiancee, Lauren Zarsky, and her mother, Dorothy Zarsky, who both reached a settlement with the SEC, officialssaid.
Mr. Collins, one of President Donald Trump’s earliest supporters, found out about the drug trial failure via an email he received from Innate’s CEO while he was attending the White House congressional picnic on June 22, 2017,the indictment says.
The congressman replied to the CEO 15 minutes later. “Wow. Makes no sense,” he wrote. “How are these results even possible???”
Then Mr. Collins and his son traded six missed phone calls over the next four minutes. They finally connected a minute later in a call that resulted in Chris Collins sharing the news of the failed drug trial with his son, the indictment says.
The next morning, Cameron Collins sold 16,508 shares of Innate stock. He sold additional shares in the subsequent hours and days after conversations with his father, the indictment says.
In total, he dumped nearly 1.4 million shares of Innate stock between June 23 and June 26.