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. 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. “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. 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. 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. 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. 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. “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.
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.