Chris Collins arrested after insider trading allegation
The FBI arrested Rep. Chris Collins Wednesday on charges of insider trading after the Securities and Exchange Commission accused him of passing on secret information about a failed clinical test to his son, who dumped 1.3 million shares of stock in a pharmaceutical company.
Mr. Collins was on the board of Innate Immunotherapeutics Ltd. and learned from an email of the failed trial which he read while attending the White House’s annual picnic for members of Congress. He immediately reached his son, Cameron, who not only sold his shares but got his girlfriend’s family and others to sell their shares, too, authorities say.
The day the failed trial went public Innate’s stock plunged 90 percent.
The SEC says Mr. Collins’ tipoff spared his family and their friends $768,600 in losses they would have accumulated if they hadn’t learned of the information.
Mr. Collins, a New York Republican, has become prominent as an outspoken supporter of President Trump.
Mr. Collins was not only a board member of Innate, but also the largest stock holder. Another stockholder had been then-Rep. Tom Price, who sold his shares when he became Mr. Trump’s first health secretary a position he has since been ousted from.
The government says the insider trading unfolded in June 2017 when the CEO of Innate reported to the board by email of “extremely bad news” of the failure of a clinical trial of a multiple sclerosis drug, MIS416.
Mr. Collins, 68, immediately reached out to his son Cameron, who then spent days dumping 1.4 million shares. The father and son traded nine phone calls during that time.
The son, 25, also told a friend, his girlfriend, and her father and mother of the information. The girlfriend’s father then told his brother and a friend, the SEC says. All told, that means the congressman’s alleged tip-off was spread to seven people, resulting in more than 1.8 million shares being dumped before the news went public.
The SEC says the congressman was well aware of the rules, since Innate had informed the board that it could not trade the company’s stock between June 5, 2017, and July 11, 2017, because of the trial information’s looming release.
Mr. Collins had been bullish on the expected results, investigators said, and his son scooped up shares in the days leading up to the expected release.
Mr. Collins learned of the “clinical failure” from an email he received while at the White House, where he was attending the annual picnic for members of Congress.
He immediately began to try to reach his son, and they spoke for six minutes, followed by the son’s scramble to sell his shares and spread the word, investigators said.
Attorneys for Mr. Collins said they’re confident he will be “completely vindicated and exonerated” and that he would have more to say on the issue later Wednesday.
“We will answer the charges filed against Congressman Collins in court and will mount a vigorous defense to clear his good name,” said attorneys Jonathan Barr and Jonathan New with the firm BakerHostetler. “It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock.”