Republican congressman arrested
New York’s Collins, 2 others accused of insider trading in biotech firm
“Wow. Makes no sense. How are these results even possible???”
Rep. Chris Collins In an email, after hearing about the drug trial
Rep. Chris Collins was arrested Wednesday morning after a federal grand jury indicted him on insider trading charges as well as lying to federal agents.
Collins and his co-defendants surrendered to authorities Wednesday morning in Manhattan, according to the U.S. Attorney’s Office for New York’s Southern District.
All three pleaded not guilty when they were arraigned in federal court, with bail for each set at $500,000. They are set to return to court Oct. 11.
“These charges are a reminder that this is a nation of laws and that everybody stands equal before the bar of justice,” said Geoffrey Berman, the U.S. attorney for the Southern District of New York. “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. The charges today demonstrate once again that no matter what the crime or who committed it, we stand committed in the pursuit of justice without fear or favor.”
A federal indictment charges Collins, his son Cameron, and Stephen Zarsky, the father of Cameron’s fiancee, with wire fraud, conspiracy to commit securities fraud and seven counts of securities fraud.
Collins is also charged with making false statements to the FBI.
Wednesday night, Collins vowed to fight the “meritless” accusations and said he would continue his November election bid in New York’s 27th Congressional District.
Specifically, Collins is accused of receiving inside information about negative clinical trial tests conducted by Innate Im mu not her a pu ti cs, an Australian biotech company with which he has long been associated.
He then is accused of passing that information on to his son, prompting the son and others to sell 1.78 million Innate shares shortly before the bad news was made public in June 2017 and the share price plunged from 45 cents to 31⁄2 cents, a 92 percent decline.
Those others included Cameron Collins’ fiancée, Lauren Zarsky; her mother, Dorothy, and other friends and family members.
They avoided losses of $768,600, according to the complaint filed by the Securities and Exchange Commission.
“Congressman Collins had a legal duty to keep that inside information secret until it was released by the company to the public,” Berman said. “Instead, as alleged, he decided to commit a crime. He placed his family and friends above the public good.”
The experimental drug in question, a compound known as MIS416, is a treatment for second-stage multiple sclerosis. Clinical trials to determine if the compound was safe and effective had begun in October 2014, according to the indictment. MIS416 was Innate’s primary product, and the company’s fortunes were directly tied to the success of the trials.
On June 22, 2017, Innate’s leadership learned the trials had determined the compound “lacked therapeutic effectiveness.”
The company’s chief executive, Simon Wilkinson, emailed members of the board of directors that day, including Collins, at 6:55 p.m. “I have some bad news to report,” his email said, according to the indictment. The trials had found the experimental drug was a “clinical failure.”
The SEC complaint alleges that the congressman called Cameron and told his son the bad news about the trial. He conveyed that information “knowing that it was in breach of his duties to Innate and anticipating that Cameron Collins would use it to trade and tip others,” the indictment alleged.
Berman said following that phone call, Cameron Collins drove to his fiancée’s parent’s home. At 9:34 p.m., the fiance’s mother, Dorothy Zarsky, called her broker to initiate selling her stock.
Over the next four days, Cameron Collins sold more than 1 million shares of Innate stock, Berman said. He avoided losses of $570,900, according to court documents. Stephen Zarsky avoided losses of $143,000.
Rep. Chris Collins, R-N.Y., was arrested Wednesday. CHIP SOMODEVILLA/GETTY IMAGES