Representative Chris Collins (R- N.Y.) was arrested by federal prosecutors early Wednesday on charges of insider trading.
Law enforcement officials accuse the politician of having sold his stock in Sydney-based Innate Immunotherapeutics Limited, before the public knew the results of one of its failed drug tests.
Chris Collins was a significant shareholder in the biotech firm, owning about 16.8% of its stock.
He also served as a member of its board of directors. The congressman surrendered to federal officials along with his son Cameron Collins, as well as Stephen Zarsky, the father of his Cameron’s fiancée.
The Justice Department lodged charges against the trio on multiple counts of securities fraud, one count of making false statements, one count of conspiracy to commit wire fraud, and one count each of wire fraud.
The indictment says that the Australian biotech firm had been researching and developing a drug known as MIS416, designed to treat multiple sclerosis early 2017.
The drug was in its initial clinical trials early last year, and had shown signs of succeeding.
However, the drug failed the trials and the company’s Chief Executive Officer was informed of the failure by researchers on June 22, 2017. –BI
The CEO shared the information with top executives and members of the board of directors including Collins, informing them of the trial failure that evening.
Federal prosecutors say Mr. Collins then called his son and told him about the results.
Mr. Cameron then sold a little over 1.3 million US Innate shares in a span of four days, before the official announcement of the drug’s failure on June 26.
The son also passed the information to his fiancée, his fiancée’s parents, and a friend. Together, they sold over 1.78 million US shares of Innate, and avoided a loss of close to $768,000. –Bloomberg
Collins has denied all charges against him, and his attorneys issued the following statement on Wednesday, “We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name.”
“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. Congressman Collins will have more to say on this issue later today,” the attorneys said.
At a news conference, U.S. Attorney for the Southern District of New York hailed the arrest of the trio saying, “These charges are a reminder that this is a nation of laws and everybody stands equal. The charges today demonstrate that once again, no matter what the crime and no matter who committed it, we stand in the pursuit of justice without fear or favor.”
Collins represents the 27th congressional district of New York and has held the position since 2013. He was the first House Republican to back President Donald Trump during the 2016 election.
The 68-year-old politician has also previously been on the firing line for owning shares of Innate Immunotherapeutics while still serving as member of the health-care committee of the House of Representatives.