New York Republican Rep. Chris Collins was arrested and indicted on charges related to securities fraud Wednesday.
The indictment is tied to securities of an Australian biotechnology company, Innate Immunotherapeutics where Collins has served on the board of directors.
Collins’ latest sale of Innate Immunotherapeutics holdings was on June 20, 2018 and valued between $15,000 and $50,000 according to House periodic transaction reports. He bought at least 4 million shares between 2016 and 2018, according to the reports. Collins’ value in Innate went from $25,000,001 to $1,000,001, according to his most recent financial disclosure. He serves on the Health subcommittee of House Energy and Commerce.
Last August, the House Ethics Committee took up an inquiry into Collins and allegations that he had shared nonpublic information about the company, in violation of House rules, standards of conduct, and federal law.
Watch: Mr. Hawkings’ Opus - 5 Reasons Why Congress Is Broken
Collins gained personal benefit and provided nonpublic information to his son Cameron Collins who sold nearly $1.4 million of Innate Immunotherapeutics shares, according to a complaint filed by the Securities and Exchange Commission.
“Christopher Collins knew or recklessly disregarded that he breached his duty by disclosing this inside information to Cameron Collins,” the SEC said.
Collins, who represents the suburbs of Buffalo and rural counties in upstate New York, became the first House Republican to endorse Donald Trump’s bid for the Republican presidential nomination.
The Australia-based biotech company is trying to develop a treatment for multiple sclerosis. Collins is the company’s largest shareholder and serves on its board of directors, attending its meetings by phone.
The indictment obtained from a federal grand jury also charges Collins’ son, Cameron Collins, as well as the father of his fiancee, Stephen Zarsky.
Collins passed nonpublic information about Innate’s drug trial results to his son to help him “make timely trades in Innate stock and tip others,” the indictment alleges. Cameron Collins then allegedly traded on that inside information and passed it to Zarsky “so that they could utilize the information for the same purpose,” according to the indictment. Zarsky also allegedly traded on the inside knowledge and passed it along to yet more unnamed co-conspirators.
SEC alleges Rep. Christopher Collins, R-N.Y., gave information to his son in June 2017 about clinical failure of trial drug, son sold 1.4 million shares and spread info through family. pic.twitter.com/Rgvcz8hSxX— Todd Ruger (@ToddRuger) August 8, 2018
In total, the three defendants avoided “over $768,000 in losses that they would have otherwise incurred” had they sold their stock after the information was made public, according to the indictment.
The defendants are accused of multiple counts of securities fraud, as well as one count of wire fraud, one count of conspiracy to commit wire fraud and one count each of making false statements.
Rep. Collins’ lawyers responded quickly to the allegations.
“We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name,” Jonathan Barr and Jonathan New said in a statement Wednesday morning. “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 vindicated and exonerated.”
After Collins surrendered to the FBI, Speaker Paul D. Ryan announced he would no longer sit on the House Energy and Commerce committee.
“Insider trading is a clear violation of the public trust. Until this matter is settled, Rep. Collins will no longer be serving on the House Energy and Commerce Committee.”
Paul Fontelo contributed to this report.
Correction: This story originally misstated Collins sale of 4 million shares in Innate Immunotherapeutics between 2016 and 2018. He bought 4 million shares.