New York Congressman Pleads Not Guilty To Insider Trading Charges

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Updated at 8:08 p.m. ET

Rep. Chris Collins, R-N.Y., was arrested Wednesday on charges related to insider trading.

A federal grand jury accused the Buffalo-area lawmaker of passing nonpublic information about a biotech company to his son, who traded on the information and passed it along to others.

"Congressman Collins cheated our markets and our justice system," said Geoff Berman, the interim U.S. Attorney for the Southern District of New York. "He placed his family and friends above the public good."

Collins was indicted along with his son, Cameron, and Stephen Zarsky, the father of Cameron's fiancĂ©e.

According to the newly-unsealed indictment, timely sales based on inside information allowed Cameron Collins, Zarsky and others to avoid losses totaling more than $768,000 when the biotech company, Innate Immunotherapeutics, failed a key clinical trial.

Rep. Collins was a director of the company and also a major investor.

According to the indictment, Collins was attending the congressional picnic at the White House on June 22, 2017, when he received an email from Innate's CEO, notifying him that a promising drug had failed a clinical trial. Within minutes, Collins telephoned his son, who then passed the information along to others.

"The crime that he committed was to tip his son Cameron so that Cameron and a few select others could trade on the news while the investing public remained in the dark," Berman said.

Collins and the other defendants are charged with securities and wire fraud, conspiracy and lying to investigators. The congressman pleaded not guilty and was released on bond.

"I believe I acted properly and within the law at all times with regard to my affiliation with Innate," Collins told reporters Wednesday night. "The charges that have been levied against me are meritless, and I will mount a vigorous defense in court to clear my name."

Collins stressed that he had not sold any of his own shares in the company. His stock lost 92 percent of its value after the adverse results of the clinical trial were made public.

According to the indictment, the elder Collins was not able to sell his stock because it was held in Australia, where trading had been halted in advance of the company's announcement. Over-the-counter trading continued, however, in the U.S., where Cameron Collins' and Zarky's shares were held.

Collins' dealings with Innate Immunotherapeutics are also the subject of an ongoing congressional ethics probe. He had promoted the stock to former Rep. Tom Price, R-Ga. Price's own holdings in the company became an issue when he was nominated to be President Trump's first secretary of health and human services.

House Speaker Paul Ryan, R-Wis., called on the House Ethics Committee to conduct its own review of the new allegations against Collins.

"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 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."

The Securities and Exchange Commission filed a parallel civil complaint that seeks to bar Collins from serving as an officer or director of any public company in the future.

Collins, who is one of the wealthiest members of Congress, was the first member to publicly endorse Donald Trump during the 2016 presidential campaign. He also served on Trump's transition team.

Berman said prosecutors were mindful of the upcoming midterm election but added that did not color the timing of the indictment. Collins' Democratic challenger, Nate McMurray, called the charges "shocking and sad, but not surprising."

"Anyone who's been paying attention knows what's going on," McMurray said in a statement. "And now the jig is up, because no matter how this is spun, it's clear that the swamp is alive and well in Washington, DC."

The nonpartisan Cook Political Report rates the district as likely to remain in GOP hands.

Collins is believed to be the first member of Congress to face charges related to insider trading, even though lawmakers are privy to all kinds of inside information and some are active stock traders.

A study of stock trades by U.S. Senators in the 1990s found they outperformed the market by an average of 12 percent per year.

"They're either geniuses at the stock market, or they know something that we don't know," said Craig Holman, a lobbyist with Public Citizen's Congress Watch division.

In 2012, after a "60 Minutes" expose, Congress passed a law requiring members to disclose their stock trades within 45 days. Since that new transparency standard took effect, Holman said, the volume of trading on the Senate side has declined by more than two-thirds.</s>The felony charges lodged Wednesday against Rep. Chris Collins, R-Clarence, sound complicated — securities fraud, wire fraud and conspiracy, among others.

But the underlying scheme at the center of federal prosecutors' case is actually quite simple: Collins tipped his son off to bad news coming from a biotechnology company, allowing his son and seven others to sell off their stock before its value tanked.

Here's a look at how the U.S. Attorney's Office in Manhattan and the Securities and Exchange Commission say all it went down:

Chris Collins, 68, owned a big chunk of Australia-based company Innate Immunotherapeutics Limited — about 16.8 percent, according to federal prosecutors.

Collins was also a member of the company's board of directors.

His son, Cameron, 25, was also a big shareholder, owning about 2.3 percent of Innate's shares.

More: Rep. Chris Collins arrested in insider trading case: What we know now

In 2014, Innate began testing a drug the company had hoped would help treat a form of multiple sclerosis.

It had the potential to be a big moneymaker for the company since there aren't many treatments available for the disease.

But in June 2017, the company got bad news: The drug had failed its trial. It didn't show any promise in treating the disease.

It was a nightmare scenario for the company that was sure to cause its stock price to plummet.

The company's CEO emailed Collins and other Innate directors on June 22, 2017, to say the drug had failed.

Collins was attending a congressional picnic at the White House when he got the email.

More: Rep. Chris Collins arrested in insider trading case: What we know now

"Wow," Collins wrote back at 7:10 p.m., according to the indictment. "Makes no sense. How are these results even possible???"

As an Innate director, Collins was required to keep that information secret.

At 7:11 p.m. — about 15 seconds after he replied to Innate's CEO — Collins called his son, phone records in the indictment show.

His son didn't pick up, leading to several rounds of phone tag until the pair connected at 7:16 p.m.

Prosecutors say Chris Collins told his son in that phone call about the failed drug trial.

"He tipped his son to confidential corporate information at the expense of regular investors," U.S. Attorney Geoffrey Berman said.

Collins didn't sell off — but his son and allies did

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.

Over the next few days, however, Cameron Collins sold off nearly 1.4 million shares of Innate stock.

Prosecutors have also accused Cameron Collins of tipping off his fiancee, his fiancee's parents and a friend. They sold off stock or tried to, too.

After markets closed on June 26, Innate announced the news of the failed drug trial public.

The stock tanked — dropping from a value of about 46 cents per share on June 26 to about 4 cents per share the next day.

Cameron Collins and seven others — including his fiancee's father, Stephen Zarsky, who was also charged in the case — avoided losses of about $768,000 by selling off their stock, according to prosecutors.

"This was the drop that was anticipated by the co-conspirators," Berman said. "They could only sell those shares on the initial tip of inside information by Congressman Collins."

When the FBI interviewed Collins about the alleged scheme, prosecutors say he lied to cover his tracks.

The congressman spoke to the FBI on April 25, 2018.

"During this interview, Christopher Collins stated, in substance and in part, that he did not tell Cameron Collins, the defendant, the drug trial results before the public announcement," according to the indictment.

Cameron Collins and Stephen Zarsky, 66, are also accused of lying to the FBI.

For their role in the alleged scheme, Chris Collins, Cameron Collins and Zarsky are facing 11 felony charges each.

Each of the defendants are charged with seven counts of securities fraud and one count each of wire fraud, making false statements, conspiracy to commit securities fraud and conspiracy to commit wire fraud.

They're also facing a civil complaint from the SEC, which could carry financial penalties.

Chris Collins' attorneys Jonathan New and Jonathan Barr say their client is innocent, saying they will "mount a vigorous defense to clear his good name."

"We are confident he will be completely vindicated and exonerated," they said in a statement.</s>BUFFALO, NY-- Congressman Chris Collins (R-Clarence) was arrested Wednesday morning after a federal grand jury indicted him on insider trading charges as well as lying to federal agents.

Collins was charged, along with his son Cameron Collins and Stephen Zarsky, the father of Cameron Collin's fiancee. All are being processed by the FBI in Manhattan.

The charges stem from an ethics investigation that was launched last year following accusations that Collins shared non-public information about an Australian biotech company. The indictment alleges Chris Collins passed the information on to his son Cameron, who allegedly used the information to purchase stock and tip others. Cameron Collins is accused of providing that information to Zarsky, and others not named in the indictment, for the same purpose.

Collins is a board member of the biotech company, called Innate Immunotherapeutics Limited. Investigators say Collins also holds 16.8% of Innate's stock.

All along, Collins denied any wrongdoing. Attorneys representing Rep. Collins issued this 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 U.S. Attorney's Office in Manhattan will speak about the indictment during a news conference scheduled for noon.

2 On Your Side will have more details as they become available.

U.S. v. Christopher Collins Et Al Indictment 18 Cr 567 by WGRZ-TV on Scribd</s>Rep. Chris Collins (R-N.Y.) has been arrested by the FBI for insider trading related to an Australian biotechnology company.

Collins, one of the largest shareholders of Innate Immunotherapeutics and a board member of the biotech firm, faces charges of securities fraud. His son and the father of his son’s fiancee were also indicted and charged with fraud.

He allegedly passed private information about the company to his son, Cameron Collins, who used the information to make timely trades and tip off others, according to the indictment.

The indictment says the congressman informed his son and Stephen Zansky, the father of his son’s fiancee, about the unpublicized trial failure of a drug the company had developed, which would later cause stock prices to plummet. They sold their stocks in the company before the public announcement, which caused the company’s stock prices to drop by 92 percent.

Chris Collins, his son and Zansky avoided $768,000 in losses, according to the indictment.

The defendants have also been charged with counts of wire fraud and false statements.

Attorneys for Chris Collins released a statement Wednesday morning, noting that the congressman would say more on the issue later in the day.

“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,” the statement reads.

Collins, one of Donald Trump’s earliest supporters in his presidential bid, reportedly talked up the company’s stock to his colleagues, including members of Congress, last year. At the time, he denied discussing Innate Immunotherapeutics with other members of Congress, but he said he did tell some constituents about the company’s stock.

In July 2017, the Office of Congressional Ethics found “a substantial reason” to believe that Collins violated securities law.

This story has been updated with more details about the indictment.</s>Rep. Christopher Collins of New York was arrested on federal charges relating to securities fraud Wednesday, in a case involving an Australian biotech company.

A Securities and Exchange Commission complaint against Collins — the first congressional Republican to endorse President Donald Trump’s bid for the White House — also details charges against his son Cameron and the father of his son’s girlfriend, Stephen Zarsky. All three have pleaded not guilty to the charges against them.

The SEC complaint says that in June 2017, Rep. Collins passed on nonpublic information about Innate Immunotherapeutics’ INNMF, +25.00% IIL, -1.67% unexpectedly negative drug-trial results to his son. Collins was a board member of the company. The case says that Cameron Collins sold nearly 1.4 million shares based on nonpublic information.

Zarsky also allegedly traded on the insider information. By selling shares before the drug-trial results were announced to the public, Cameron Collins, Stephen Zarsky and those they tipped off avoided losses of about $768,600, the SEC said.

Rep. Collins “cheated our markets and our justice system,” said Geoffrey Berman, U.S. attorney for the Southern District of New York, at a news conference. “He placed his family and friends above the public good.”

From the MarketWatch archives: Innate Immunotherapeutics stock plummets 92% after midstage clinical trial miss

Rep. Collins, according to the complaint, got an email from Innate’s chief executive officer about the results while attending an official event on the South Lawn of the White House on June 22, 2017. (Read the SEC’s complaint.)

“Wow. Makes no sense. How are these results even possible???” the congressman responded, before calling his son from the same event.

What’s more, the complaint indicates Collins took steps in the weeks leading up to the trial results to ensure his son’s Innate shares would be “readily tradeable.” At the time, Collins and his son and daughter each owned shares held by an Australian agent that couldn’t be sold in the U.S.

Rep. Collins, his son and Zarsky are also charged with making false statements to the Federal Bureau of Investigation.

“Congressman Collins couldn’t keep his crime a secret forever,” Berman said. “The FBI asked to interview him, and, instead of telling the truth, he lied.”

Lawyers for Collins said in a statement that the government “does not allege that Congressman Collins trade a single share of Innate Therapeutics stock.”

That’s true, but the government says the congressman benefited in other ways. The SEC’s complaint says Rep. Collins got a “personal benefit” from tipping off his son, and that the congressman “also knew or recklessly disregarded that Cameron Collins would trade on his tip.”

In a 2016 Supreme Court case, the high court ruled unanimously that “giving a gift of trading information is the same thing as trading by the tipper followed by a gift of the proceeds.”

“We are confident he will be completely vindicated and exonerated,” said Collins lawyers Jonathan Barr and Jonathan New.

Berman told reporters that politics did not “enter into our decision making” regarding the case, which comes ahead of highly anticipated November midterm elections. “We bring a case when a case is ready to be brought.”

The Buffalo News reported that Collins, whose congressional district encompasses portions of the Buffalo and Rochester areas, vowed in an email to supporters that he’ll stay in office, run for re-election and fight to clear his name.

Also see: Congressman may have broken law with biotech he held, watchdog says</s>Rep. Chris Collins (R-NY) was arrested Wednesday on federal charges of insider trading for allegedly using his position at a pharmaceutical company to leak information to his son, who then used it to dump company stock before it crashed. He is also charged with lying to the FBI.

Collins sat on the board of directors of Innate Immunotherapeutics, an Australian pharma company where he was also lead shareholder. Cameron Collins, his son, was also a shareholder, as was Cameron’s father-in-law to-be. All three have been charged with conspiracy to commit securities fraud by the U.S. Attorney’s Office for the Southern District of New York.

House Speaker Paul Ryan said Collins will not serve on the energy and commerce committee “until this matter is settled.”

Innate was anxiously awaiting the results of an FDA trial for its experimental multiple-sclerosis drug in 2017 when it got news the drug failed. The FDA told Innate’s CEO, who then told the board of directors, including Collins.

“I have bad news to report,” the CEO’s email began.

Minutes later, Collins frantically called to his son while he was attending a congressional picnic at the White House. After trying six times, Collins finally got through to Cameron and allegedly told him Innate’s drug was a bust. Cameron then gave the news to his fiancée’s family, who were also invested in Innate: the fiancée, her father Stephen Zarsky, his wife, as well as Zarky's friend. (Zarsky also allegedly tipped off his brother, his sister, and a long-standing friend, who were all invested in Innate.)

Ironically, it was Cameron who convinced the family to invest in the first place, according to the indictment.

When U.S. markets opened the following morning, Cameron placed an order to sell 16,508 shares of Innate stock. Over the next few days, he placed dozens more orders. One time, Cameron was on the phone with his father when placed an order to dump 50,000 shares.

Zarksy’s family also sold off stock, the feds say.

Feds say the trades allowed them all to “avoid over $768,000 in loses that they would have otherwise incurred if they had sold their stock in Innate after the Drug Trial results became public.”

When the news finally did go public, Innate’s stock dropped 92 percent in value in one day.

Though Collins is accused of providing inside information, authorities say he did not trade on it because his Innate shares were listed on the Australian stock exchange, where trading was halted as soon as Innate heard from the FDA. (U.S. trading was not halted.)

Collins’ lawyers highlighted that in a statement defending him.

"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.

Collins already faced a congressional investigation over the allegations before criminal charges were ever filed.

Indeed, just days before the alleged insider trading, he was interviewed by the Office of Congressional Ethics about his dealings with Innate. OCE recommended the House Ethics Committee probe Collins over his apparent use of office to benefit Innate. (The committee has not formally begun its investigation.)

Collins’s son and Zarksy are also charged with lying to the FBI. They and Collins also face counts of wire fraud and mail fraud.

Since he was elected to Congress in 2012, Collins has risen to become one of President Donald Trump’s most vocal supporters. Collins was the first member of Congress to endorse Trump during the presidential campaign.

Collins was a wealthy Buffalo-area businessman before entering Congress. In 2005, he invested $5 million in the company that later became Innate. Over the next decade, Collins pitched friends, family and even fellow congressmen on Innate. By mid-2017, almost 30 percent of Innate was owned by Collins or his associates. Shareholders included his two children, four campaign donors, and his chief of staff, and six Republican congressman.</s>Rep. Chris Collins, R-N.Y., has been arrested on charges of securities and wire fraud.

Rep. Chris Collins, who represents New York's 27th District, was arrested Wednesday morning in New York on federal charges related to securities fraud. The District Attorney for the Southern District of New York will hold a press conference on the charges at 12 p.m. ET.

A 22-page civil complaint accuses Collins, and associates, including Collins' son Cameron, of using inside information from negative clinical trial tests conducted by Innate, an Australian biotech company, and selling $1.78 million Innate shares before the bad news went public and the share price plummeted.

In an accompanying criminal complaint, Collins is charged with one count of conspiracy to commit securities fraud, wire fraud, conspiracy to commit wire fraud, making a false statement and seven counts of securities fraud.

Collins' attorneys Jonathan Barr and Jonathan New issued this statement on Wednesday morning:

"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."

USA Today will provide coverage of the press conference in the player above.</s>The FBI has arrested New York Rep. Chris Collins on securities fraud-related charges, law enforcement officials said.

The congressman, a Republican who hails from western New York, surrendered to the FBI at 26 Federal Plaza Wednesday morning, officials said.

He’s expected to appear in Manhattan federal court later today.

Collins was one of the first members of Congress to endorse President Donald Trump during his presidential campaign.

Last fall, the Office of Congressional Ethics released a report that said the congressman may have violated House rules when he bought discounted stock that wasn’t available to the public and was offered to him based on his status as a politician.

The report also found that Collins, a board member of Australia-based Innate Immunotherapeutics, may have shared nonpublic information about the company, another possible violation.

Innate had been in the process of developing a drug to treat Multiple Sclerosis in 2017, according to the indictment. When the product failed drug trials in June 2017, however, the public results sent Innate stock prices plummeting by 92 percent.

Collins — one of Innate's largest stockholders — had access to information about the company and its research that wasn't available to the public, the indictment alleges.

When Collins found out about the trial results, he allegedly told his son Cameron Collins, also an Innate stockholder, who told his then-girlfriend’s father Stephen Zarsky, as well as several other stockholders.

Cameron Collins, Zarsky, and the stockholders Collins told subsequently sold their Innate stock before prices plunged, narrowly avoiding hundreds of thousands of dollars in losses, the indictment says.

Chris Collins faces charges including conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud and wire fraud, though the indictment doesn't claim that he sold his own Innate stock. Cameron Collins and Zarsky are both charged in the indictment as well.

The congressman's attorneys Jonathan Barr and Jonathan New, of BakerHostetler, on Wednesday said they would "answer the charges filed against [Collins] in court and... 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," they said in a statement, noting that Collins would speak about the indictment later in the day on Wednesday. "We are confident he will be completely vindicated and exonerated."

In her own statement, House Democratic leader Nancy Pelosi said Americans "deserve better than the GOP's corruption, cronyism and incompetence."

"The charges against Congressman Collins show the rampant culture of corruption and self-enrichment among Republicans in Washington today," she said. "The Ethics Committee must accelerate its own investigation into Congressman Collins' illegal abuse of the public trust."</s>New York Congressman Chris Collins spoke out late Wednesday hours after a federal grand jury indicted him on charges including insider trading, vowing to fight the "meritless" accusations and pledging to continue his November election bid.

At a news conference, the Republican addressed the accusations in a seven-minute statement after which he didn't take any questions. He said he hasn't violated ethical guidelines or laws with his personal investments and vowed to remain on the ballot for re-election in New York's 27th Congressional District in November.

"The charges that have been levied against me are meritless and I will mount a vigorous defense in court to clear my name," Collins said.

Collins and two co-defendants surrendered to authorities Wednesday morning in Manhattan, according to the U.S. Attorney’s Office for New York’s Southern District.

All three pleaded not guilty when they were arraigned in federal court, with bail for each set at $500,000. The judge set a return date of Oct. 11 for a status hearing.

More: New York GOP Rep. Chris Collins arrested on insider trading charges

More: Along with Rep. Chris Collins, here are other lawmakers indicted while in office

A federal indictment charges Collins his son Cameron, and Stephen Zarsky, the father of Cameron's fiancée, with wire fraud, conspiracy to commit securities fraud and seven counts of securities fraud.

Rep. Collins is also charged with making false statements to the FBI.

"These charges are a reminder that this is a nation of laws and that everybody stands equal before the bar of justice," said Geoffrey Berman, the U.S. Attorney for the Southern District of New York, at a noon press briefing. "Congressman Collins, who by virtue of his office helps to write the laws of this nation, acted as if the law didn't apply to him. The charges today demonstrate once again that no matter what the crime or who committed it, we stand committed in the pursuit of justice without fear or favor."

► READ: Collins arrested: What we know now

Specifically, Rep. Collins is accused of receiving inside information about negative clinical trial tests conducted by Innate Immunotherapeutics, an Australian biotech company with which he has long been associated.

He then is accused of passing that information on to his son, prompting the son and others to sell 1.78 million Innate shares shortly before the bad news was made public in June 2017 and the share price plummeted.

Those others included Cameron Collins' fiancée, Lauren Zarsky, her mother, Dorothy, and other friends and family members.

They avoided losses of $768,600, according to the complaint filed by the Securities and Exchange Commission.

"Congressman Collins had a legal duty to keep that inside information secret until it was released by the company to the public," Berman said. "Instead, as alleged, he decided to commit a crime. He placed his family and friends above the public good."

In a message to supporters Wednesday afternoon, Collins said he and his son look forward to clearing their names and being exonerated at trial.

"My connections with the company are well known," Collins said. "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."

Includes reporting by staff writers Steve Orr and Gary Craig, Albany correspondent Jon Campbell and Washington bureau correspondent Nicole Gaudiano, all part of the USA TODAY Network.</s>Rep. Chris Collins, R-N.Y., has been arrested on insider trading charges lodged by the Justice Department, law enforcement officials said Wednesday morning.

The indictment obtained from a federal grand jury also charges Collins' son, Cameron Collins, as well as the father of his fiancee, Stephen Zarsky.

The indictment relates to Australian biotech company Innate Immunotherapeutics, on which Collins served as a board member.

In June 2017, Collins passed nonpublic information about Innate's drug trial results to his son in order to help him "make timely trades in Innate stock and tip others," the indictment alleges.

His son then traded on that inside information and passed it to Zarsky, along with numerous unnamed co-conspirators, "so that they could utilize the information for the same purpose," according to the indictment.

Zarsky, too, allegedly traded on the inside knowledge and passed it along to yet more unnamed co-conspirators.

In total, the three defendants avoided "over $768,000 in losses that they would have otherwise incurred" had they sold their stock after the information was made public, according to the indictment.
U.S. Representative Chris Collins (R–NY) is arrested on charges of securities and wire fraud, conspiracy and lying to investigators. He is accused of passing nonpublic information about Innate Immunotherapeutics, a biotech company, to his son, who traded on the information and passed it along to others. Collins was a director of the company and also a major investor.