Rep. Chris Collins (R-N.Y.), a top ally of President Trump on Capitol Hill, has been arrested and charged with federal securities fraud related to an Australian pharmaceutical company of which he had been the largest shareholder.
Collins, who represents parts of western New York, turned himself in to the FBI on Wednesday morning, news reports said. Lawyers for the GOP lawmaker indicated that he would address the charges later Wednesday.
An indictment from a grand jury also charges Collins’s son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins’s fiancée.
The U.S. Attorney’s Office for the Southern District of New York will hold a press conference at noon on Wednesday to announce the charges.
The insider-trading case centers on Innate Immunotherapeutics, a Sydney-based pharmaceutical company that tried to develop a drug to fight advanced multiple sclerosis.
Prosecutors allege that Collins, who had served on the company’s board of directors, gave nonpublic information about drug trial results to his son to help him “make timely trades in Innate stock and tip others.”
Innate had expected positive results from clinical tests of its multiple sclerosis drug, but the treatment was not found to be successful in clinical trials that ended in June 2017.
According to the indictment, the company received the test results on June 22 and halted trading of its stock in Australian markets pending the announcement of the negative findings, but not in the U.S.
The company’s CEO shared the results with board members and top executives that evening, according to the indictment, explaining, “I have bad news to report.” Investigators said Collins received the email while attending the White House Congressional Picnic and was stunned by the news.
“Wow. Makes no sense. How are these results even possible???” Collins allegedly replied to the email.
Collins then allegedly shared the confidential test results with his son, who later sold more than 1.3 millions shares of Innate in U.S. markets ahead of the June 26 announcement of the drug’s failure.
Collins did not sell his Innate shares and lost roughly $17 million after the results were announced, but his son allegedly avoided more than $570,000 in losses because of the alleged tip from the congressman.
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