In­side ‘tip­ping’ of in­vestors at is­sue as Collins de­nies any wrong­do­ing

The Buffalo News - - WASH­ING­TON NEWS -

port col­lec­tively por­tray a con­gress­man work­ing hard on be­half of an Aus­tralian com­pany in pos­si­ble vi­o­la­tion of U.S. law and House ethics rules.

Ac­cord­ing to the Of­fice of Con­gres­sional Ethics re­port:

• Three times in 2015 and 2016, Collins sent emails to In­nate in­vestors that in­cluded what ap­pears to be pri­vate in­for­ma­tion about the com­pany. By do­ing that, Collins may have vi­o­lated the fed­eral Stop Trad­ing on Con­gres­sional Knowl­edge (STOCK) Act, a law bar­ring in­sider trad­ing among mem­bers of Congress, as well as House ethics guide­lines.

• In Novem­ber 2013, Collins met with of­fi­cials at the Na­tional In­sti­tutes of Health and asked that an NIH re­searcher meet with In­nate’s chief science of­fi­cer to dis­cuss pos­si­ble clin­i­cal tri­als for the com­pany’s ex­per­i­men­tal mul­ti­ple scle­ro­sis drug. That could have vi­o­lated House rules that bar law­mak­ers from tak­ing of­fi­cial ac­tions that would ben­e­fit an en­tity in which they have a sig­nif­i­cant fi­nan­cial in­ter­est.

Collins de­nied any wrong­do­ing. “Through­out my ten­ure in Congress I have fol­lowed all rules and eth­i­cal guide­lines when it comes to my per­sonal in­vest­ments,” the three-term con­gress­man said in a state­ment. “I was elected to Congress based upon my suc­cess in the pri­vate sec­tor, and my will­ing­ness to use that ex­pe­ri­ence every day to fa­cil­i­tate an en­vi­ron­ment that cre­ates eco­nomic op­por­tu­nity and jobs.”

Ev­i­dence in­cludes emails

The ethics re­port says Collins, 67, a for­mer Erie County ex­ec­u­tive, may have been guilty of a very dif­fer­ent kind of in­sider trad­ing than had orig­i­nally been al­leged in com­plaints to the ethics of­fice.

Ac­cord­ing to those com­plaints, Collins may have acted on in­side in­for­ma­tion tied to his work in Congress in the sum­mer of 2016 when he bought ad­di­tional In­nate stock while work­ing on leg­is­la­tion that could boost clin­i­cal tri­als con­ducted by such com­pa­nies.

But the al­le­ga­tion in the ethics re­port is that in late 2015 and early 2016, he may have en­gaged in “tip­ping” – us­ing in­side in­for­ma­tion that he knew about In­nate to per­suade in­vestors to put more money down on the com­pany. In a De­cem­ber 2015 email, he pro­vided In­nate in­vestors with in­for­ma­tion about clin­i­cal tri­als of In­nate’s drug for mul­ti­ple scle­ro­sis that the com­pany had not made pub­lic, the ethics of­fice said.

Collins pro­vided more pre­vi­ously undis­closed in­for­ma­tion about those clin­i­cal tri­als in an email to in­vestors in Jan­uary 2016, the ethics of­fice said. In ad­di­tion, that email in­cluded pre­vi­ously un­known de­tails about In­nate’s plans to work with a large phar­ma­ceu­ti­cal com­pany to pro­duce its drug for mul­ti­ple scle­ro­sis. And in a June 1, 2016, email, Collins dis­cussed In­nate’s com­ing pri­vate stock of­fer­ing be­fore the com­pany an­nounced it.

Adding up the in­for­ma­tion in those three emails, the ethics of­fice said: “Some in­for­ma­tion Rep­re­sen­ta­tive Collins shared with In­nate in­vestors was likely non­pub­lic and may have been im­por­tant to in­vestors mak­ing a de­ci­sion on whether to pur­chase In­nate stock.”

Ac­cord­ing to Collins’ lawyer, the ethics of­fice doesn’t prove its case. “No facts suf­fi­cient to sup­port these claims are present,” at­tor­ney E. Mark Braden said in a let­ter to the Ethics Com­mit­tee.

‘As­sist a sin­gle en­tity’

The ethics of­fice re­port also ac­cuses Collins of an en­tirely sep­a­rate vi­o­la­tion of House rules, which pro­hibit law­mak­ers from tak­ing of­fi­cial ac­tions that aim to ben­e­fit a com­pany in which they have a ma­jor fi­nan­cial stake.

This al­le­ga­tion stems not from the com­plaints that Slaugh­ter, good-gov­ern­ment groups and con­stituents filed against Collins, but from the Of­fice of Con­gres­sional Ethics’ own in­ves­ti­ga­tion.

In­ves­ti­ga­tors found that a Collins staff mem­ber ar­ranged a meet­ing for him at the Na­tional In­sti­tutes of Health on Nov. 18, 2013. An NIH em­ployee, whom the ethics re­port didn’t name, said Collins dis­cussed In­nate at the meet­ing.

“They need some help with the de­sign of the next Phase 2 trial and he asked me whether I would be will­ing to help them and I said yes,” that NIH em­ployee told in­ves­ti­ga­tors.

After­ward, that NIH em­ployee met three times with In­nate’s chief sci­en­tific of­fi­cer, the re­port said.

In other words, Collins’ in­volve­ment got In­nate some gov­ern­ment help, the ethics re­port said. “There is a sub­stan­tial rea­son to be­lieve that Rep­re­sen­ta­tive Collins took of­fi­cial ac­tions or re­quested of­fi­cial ac­tions that would as­sist a sin­gle en­tity in which he had a sig­nif­i­cant fi­nan­cial in­ter­est, in vi­o­la­tion of House rules and stan­dards of con­duct,” the re­port said.

Braden said that nei­ther the law­maker nor the NIH did any­thing wrong. The con­gress­man and the gov­ern­ment sci­en­tist he met with “had an obli­ga­tion to in­volve NIH in the stud­ies con­ducted by In­nate, and NIH wel­comed the in­for­ma­tion as an im­por­tant as­pect of its mis­sion,” Braden wrote in his let­ter to the Ethics Com­mit­tee.

Sub­poe­nas are ad­vised

The board of the Of­fice of Con­gres­sional Ethics, a non­par­ti­san in­ves­tiga­tive body that Congress cre­ated in 2008 after a wave of con­gres­sional scan­dals, voted, 6-0, to sub­mit its re­port and rec­om­men­da­tions to the Ethics Com­mit­tee.

And in a state­ment re­leased Thurs­day, the Ethics Com­mit­tee chair­woman, Rep. Su­san W. Brooks, R-Ind., and its rank­ing Demo­crat, Rep. Ted Deutch of Florida, said the com­mit­tee would con­tinue its in­ves­ti­ga­tion.

“The Com­mit­tee notes that the mere fact of con­duct­ing fur­ther re­view of a re­fer­ral, and any manda­tory dis­clo­sure of such fur­ther re­view, does not it­self in­di­cate that any vi­o­la­tion has oc­curred, or re­flect any judg­ment on be­half of the Com­mit­tee,” Brooks and Deutch said in a joint state­ment.

The com­mit­tee has pow­ers that the Of­fice of Con­gres­sional Ethics does not have. It can sub­poena wit­nesses, and the ethics of­fice rec­om­mended that it do just that with wit­nesses who re­fused to co­op­er­ate with the in­ves­ti­ga­tion, such as In­nate CEO Si­mon Wilkin­son. For­mer Health and Hu­man Ser­vices Sec­re­tary Tom Price and for­mer Rep. Bill Paxon – who both in­vested in In­nate after hear­ing about the com­pany from Collins – should be sub­poe­naed, too, the ethics re­port said.

The Ethics Com­mit­tee also has the power to rec­om­mend pun­ish­ment against law­mak­ers who vi­o­late House rules. But the panel has a rep­u­ta­tion for go­ing easy on House mem­bers. And in Collins’ case, the com­mit­tee did not set up an in­ves­tiga­tive sub­com­mit­tee, which ethics watch­dogs see as a sign that the panel is tak­ing a case se­ri­ously.

There also is an open ques­tion about whether other in­ves­tiga­tive agen­cies may be look­ing at Collins’ re­la­tion­ship with In­nate. Slaugh­ter wrote to the Se­cu­ri­ties and Ex­change Com­mis­sion and the act­ing U.S. At­tor­ney for the South­ern Dis­trict of New York, ask­ing them to in­ves­ti­gate the mat­ter, and it’s pos­si­ble that the ethics re­port could lead ei­ther of those of­fices to look into the sit­u­a­tion.

Slaugh­ter crit­i­cizes

Braden in­sists that there’s noth­ing for any­one to in­ves­ti­gate. “Rep. Collins has done noth­ing im­proper, and his co­op­er­a­tion and can­dor dur­ing the OCE re­view process con­firm he has noth­ing to hide,” the lawyer said in his let­ter to the House Ethics Com­mit­tee.

He noted that the Of­fice of Con­gres­sional Ethics dis­missed other al­le­ga­tions against Collins, such as Slaugh­ter’s ac­cu­sa­tion that he wrote a pro­vi­sion in a bill called the 21st Cen­tury Cures Act to ben­e­fit In­nate.

Braden said the ethics of­fice al­le­ga­tions against Collins “are con­structed from whole cloth and are without va­lid­ity,” and should be dis­missed.

“Eachrec­om­men­da­tion­is­the re­sult of a tor­tured in­ter­pre­ta­tion of re­al­ity and also be­speaks a mis­un­der­stand­ing of the facts, the law, or both, and should be re­jected,” Braden wrote.

Slaugh­ter couldn’t dis­agree more. While the Of­fice of Con­gres­sional Ethics’ find­ings about Collins were dif­fer­ent from what Slaugh­ter had sug­gested the com­mit­tee might find, she said the of­fice’s re­port made it clear that Collins likely vi­o­lated fed­eral law in tout­ing In­nate’s prospects with in­side in­for­ma­tion.

“He put his ob­ses­sion to en­rich him­self be­fore the peo­ple he swore to rep­re­sent,” said Slaugh­ter, who au­thored the STOCK Act, which makes clear that in­sider trad­ing laws ap­ply to mem­bers of Congress. “It is a dis­grace to Congress and to his con­stituents, who de­serve bet­ter.”

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