NEW YORK-Republican U.S. Rep. Christopher Collins of NY was arrested Wednesday on charges he fed inside information that he gleaned from sitting on the board of a biotechnology company to his son, helping others dodge hundreds of thousands of dollars in losses when bad news came out.
Prosecutors say that Collins improperly traded on inside information from the Australian drug company Innate Immunotherapeutics Limited, on whose board he served.
The Australia-based biotech company is trying to develop a treatment for multiple sclerosis. They sold their stocks in the company before the public announcement, which caused the company's stock prices to drop by 92 percent.
The tip-off allowed Cameron, Zarsky and others to dodge more than $768,000 in losses.
The congressman, Cameron Collins, and Stephen Zarsky-the father of Cameron's fiancee-were charged Wednesday with securities fraud, wire fraud and making false statements to federal officials. The allegation is that Collins told his son Cameron nonpublic information about the company's drug trials in order to facilitate "timely trades".
Chris Collins' lawyers responded swiftly, insisting he will be "completely vindicated".
An early supporter of Donald Trump, Collins, who represents suburbs of Buffalo and Rochester, was the first congressman to endorse him, in February of 2016.
The feds say Collins found out about the drug trial failure while he was attending the Congressional picnic at the White House in June of 2017.
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"Access to this kind of information carries with it significant responsibility, especially those in society who hold a position of trust", said William Sweeney, assistant director of the FBI New York field office.
The Daily Beast said a year ago that Collins' daughter, Caitlin, was the company's fifth-largest shareholder and his son, Cameron, was its sixth-largest.
"Congressman Collins violated his duty to keep innate information secret", said Geoffrey Berman, the US attorney for the Southern District of NY, in a news conference Wednesday.
At 7:11, one minute after sending that email, Collins tried to call his son Cameron, who was also an investor in Innate. "How are these results even possible?"
Chris Collins couldn't sell off his stock, according to prosecutors; He was already under a congressional ethics investigation and his stock was in the Australian markets, which had already halted trading of Innate stock.
Collins' trades in Innate Immunotherapeutics had already been the subject of a House ethics probe.
The Office of Congressional Ethics and the House Ethics Committee launched an investigation into Collins' stake in Innate as a potential conflict of interest.