Rep. Collins Vows to Fight Insider-Trading Charges, Will Remain on Ballot After Indictment
Rep. Chris Collins (R-N.Y.) says that he’ll continue to represent the state’s 27th Congressional District and will run for re-election, after being arrested on insider-trading charges on Aug. 8.
In a press conference the same day, Collins said he plans to clear his name for what he calls “meritless” accusations that involved his investment in an Australian biomedical company.
I am proud to represent the people of #NY27. The charges being brought against me are meritless and I intend to fight to clear my name. I will continue to work hard for the people of #NY27 and earn your vote this November
— Chris Collins (@CollinsNY27) August 8, 2018
Collins was a board member and majority shareholder in Sydney-based Innate Therapeutics, which was developing a drug to treat multiple sclerosis.
As a board member, Collins received news ahead of the public that the company’s signature drug had failed its 12-month test.
Prosecutors allege that directly after he received the news, he made five phone calls to his son, who also had shares in the company, before finally reaching him on the sixth try.
They spoke after trading had closed for the day, and the next day, the son started selling off his stock, as did his fiancee’s father, who is another defendant in the case, according to the indictment.
The three men were charged with securities fraud, wire fraud, and making false statements to the FBI during interviews; all have pleaded not guilty. The Securities and Exchange Commission is also suing the three in Manhattan federal court.
Six others are mentioned in the indictment as co-conspirators, but none of them are named or face charges.
Collins and his lawyers have maintained that he is innocent, and point to the fact that he didn’t sell his shares after he learned of the news as evidence of his innocence.
“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,” his lawyers said in a statement.
STATEMENT: Attorneys for Rep. Collins Respond to Charges Filed Today https://t.co/rzNnUmyJDd
— Rep. Chris Collins (@RepChrisCollins) August 8, 2018
His decision not to sell, however, could be due in part to logistics.
According to the indictment, Innate Therapeutics ordered a halt to trading on the Australian Securities Exchange (ASX) starting June 22, 2017, the same day Chris Collins allegedly received the news of the test results. Trading didn’t resume on ASX until June 27, 2017, but trading continued on the U.S. over-the-counter (OTC) market.
“Chris Collins’ shares were not held at a U.S. broker where they could be traded in the domestic OTC market. Accordingly, he did not trade his own stock, and instead tipped [his son] Cameron Collins,” the indictment alleges.
Between June 26 and June 27, the date the test results were made public, Innate’s shares fell from $0.46 to $0.04 per share, causing Chris Collins, who had an almost 17 percent stake in the company, to lose millions.
Cameron Collins was able to avoid $570,900 in losses by selling his stock before the news became public, and his fiancee’s father, Stephen Zarsky, avoided losses of about $143,900, according to the indictment.
In addressing the charges, Chris Collins said he started investing in Innate years ago after watching a close family member suffer from secondary progressive multiple sclerosis, “which is about the most debilitating disease known to mankind,” he said.
“Without my investments in steadfast financial support, the company would have gone under, bringing with it a premature end to a drug I truly thought would revolutionize treatment options for secondary progressive MS.”
For that reason, he said, he decided not to sell his stock when he learned of the news.
“I believe I acted properly and within the law at all times with regard to my affiliation with Innate. Throughout my tenure in Congress, I have followed all rules and all ethical guidelines when it comes to my personal investments, including those with Innate,” he said.
Today I addressed the false charges that are being brought against me. It’s an honor and a privilege to serve the people of #NY27 and I will continue to work hard for you every day as I fight to clear my name. https://t.co/9q363y6dfx
— Rep. Chris Collins (@RepChrisCollins) August 9, 2018
Collins started his career in business before moving to politics. He bought a small industrial part manufacturer that made speed increasers and decreasers for things like bridges and train cars, and sold it in 1997. He first ran for Congress in 1998 and lost. He again entered the private sector, investing in bankrupt or failing companies. In 2007, he became county executive for Erie County, but lost to Democrat Mark Polonkarz in 2011, after which he said he would not run again.
“I’m going back to the private sector,” he said, according to Buffalo Business First. “I know how to create jobs.”
However, he did run again in 2012 and won a seat in the House of Representatives, a post that he has held since then.
Before the indictment, he served on the House Committee on Energy and Commerce, but was taken off by Rep. Paul Ryan (R–Wisc.), pending the outcome of the case.
“While his guilt or innocence is a question for the courts to settle, the allegations against Rep. Collins demand a prompt and thorough investigation by the House Ethics Committee,” Ryan said in a prepared statement.
“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.”
Collins, his son, and Stephen Zarsky have all been released on $500,000 bond.