Manhattan federal prosecutors on Wednesday morning announced insider trading charges against Buffalo-area Republican Rep. Chris Collins, potentially putting another GOP seat up for grabs on the eve of midterm elections that could shift control of the House.
The new indictment charges that Collins was a director and major shareholder in Innate Immunotheraputics Limited, an Australia-based pharmaceutical company, and tipped his son Cameron to trade on inside information about a highly touted drug to treat multiple sclerosis.
Cameron Collins, his fiancee, her father and mother and other co-conspirators avoided $768,000 in losses by trading just ahead of the announcement of a failed clinical trial for the drug, known as MIS416, which caused the stock’s price to drop by 92 percent.
“Congressman Collins, who helps to write the laws of our nation, acted as if the laws didn’t apply to him,” Geoffrey Berman, U.S. Attorney for the Southern District of New York, said at a news conference Wednesday.
Berman also deflected questions about a possible political impact. He said November’s elections were “months away” and “politics does not enter into our decisionmaking.”
Collins’ district had been considered solidly Republican — President Donald Trump carried it with about 60 percent of the vote in 2016. But pundits Wednesday said that charges could raise the hope of Democrat Nate McMurray, who told reporters he had raised as much money Wednesday after the indictment was announced as he had during the entire race.
Lawyers for Collins, 68, of Clarence, said in a statement posted on his congressional website, “We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name. … We are confident he will be completely vindicated and exonerated.”
According to the charges, the MIS416 drug had shown promise but was the only viable drug Innate had in its pipeline when Collins received word by email that the trial had been a failure while he was attending a White House congressional picnic on June 22, 2017.
The congressman responded by email at 7:10 p.m. “How are these results even possible?” and then traded six missed calls with his son between 7:11 and 7:15 p.m., before they spoke at 7:16 p.m. for six minutes. The next morning, Cameron Collins began sales that totaled 1,391,500 shares by the time of the June 26 public announcement of the drug failure.
Rep. Collins himself, the government said, did not trade on the information, because his activities promoting the company were already under scrutiny by the Office of Congressional Ethics, and because his shares were held in Australia where trading was halted pending announcement of the results.
He lost “millions of dollars,” the government said, a concession cited by Collins’ lawyers. “It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock,” they said in their statement.
The government said after the results were announced, Collins issued misleading public statements that implied his son had suffered losses, and then lied to FBI investigators about leaking information.
Prosecutors also charged Cameron Collins’ fiancee’s father, Stephen Zarsky, with conspiracy and securities fraud. Unindicted co-conspirators who traded but were not charged included the fiancee; her mother; and a friend of Cameron.
House Speaker Paul Ryan on Wednesday said he was removing Collins, a backer of Trump, from his position on the House Energy and Commerce Committee, and Democratic leader Nancy Pelosi said the charges showed a “rampant culture of corruption” among Republicans.
The congressman, his son and Zarsky all pleaded not guilty at their arraignments Wednesday afternoon and were released on $500,000 personal recognizance bonds. Collins was ordered to surrender his diplomatic passport.
With Yancey Roy