New York Republican congressman Christopher Collins, son charged with insider trading
An influential New York congressman, who was the first House Republican to endorse Donald Trump for president, has been charged by federal prosecutors...
An influential New York congressman, who was the first House Republican to endorse Donald Trump for president, has been charged by federal prosecutors along with his son of insider trading.
Christopher Collins, 68 the US Representative for New York's 27th Congressional District, his son, Cameron Collins, 25 and a third individual, Stephen Zarsky, 66 have been charged by federal prosecutors as well as by the Securities and Exchange Commission for participating in a scheme to commit insider trading relating to securities of Innate Immunotherapeutics (Innate), an Australian biotechnology company on whose Board of Directors the senior Collins served.
As alleged in the indictment, in June 2017, Christopher Collins, who possessed material, non-public information through his service on Innate's board of directors, betrayed his duties of trust and confidence to Innate by providing inside information to his son about confidential drug trial results so that his son and others, including his fiancee's father Zarsky, could trade before the drug trial results were publicly announced.
As a result the illegal tips, Cameron Collins, Zarsky and others who received the inside information avoided a total of approximately USD 768,000 in losses.
When later interviewed by the FBI, the three made false statements to cover up their participation in the insider trading scheme. They are each charged with conspiracy, securities fraud, wire fraud, and making false statements to the FBI.
All three defendants surrendered this morning and will be later arraigned before United States District Judge Vernon Broderick in federal court in the Southern District of New York. They all face a minimum of 20 years in prison on the various charges.
Collins was an early backer of Trump and has been one of the president's most outspoken supporters in the House.
In a separate action, the United States Securities and Exchange Commission filed a civil action against the three.
US Attorney Geoffrey Berman said Collins, who, by virtue of his office, helps write the laws of this country, acted as if the law did not apply to him. Christopher Collins, who served as an independent director of the Australian biotech company tipped his son after receiving confidential information about negative clinical trial results for Innate's multiple sclerosis drug.
The complaint alleges that Christopher Collins learned of the negative clinical trial results on the evening of June 22, 2017 in an email from Innate's CEO to the board of directors, which stated that the CEO had extremely bad news indicating that drug trial results pretty clearly indicate clinical failure'. The SEC alleges that Christopher Collins replied to the CEO's email within minutes, expressing his surprise at the results, and then called and spoke to his son minutes later.
According to the SEC's complaint, later that same evening, Cameron Collins drove to Stephen Zarsky's home and tipped him. The next morning, almost two hours prior to the market opening, Cameron Collins and Zarsky allegedly entered orders to sell Innate shares, which were executed just after the market opened. Over the next two trading days, Cameron Collins allegedly sold a total of nearly 1.4 million Innate shares. According to the complaint, a few hours after the last of these sales, Innate publicly announced the negative results of the clinical trial. The company's stock price then plummeted by more than 92 percent.
Through their sales, Cameron Collins and Zarsky avoided losses of more than USD 700,000. The complaint also alleges that they contacted other friends and family members who also sold Innate shares in advance of the negative announcement.
'We allege that Christopher Collins breached his duty of confidentiality to Innate's shareholders, exploiting his access to non-public information about the company's clinical trial results so that his son could avoid significant financial losses, said Stephanie Avakian, Co-Director of the SEC Enforcement Division. Our laws are designed to prevent and punish such misconduct, which undermines investors' trust in the fairness and integrity of our markets.