UPDATED: 1:17 EDT
Rep. Chris Collins (R-N.Y.) was arrested Wednesday morning on charges related to securities fraud. His son, Cameron Collins, also faces insider trading charges. Collins reportedly surrendered to the FBI.
What are the charges?
Collins is being charged with 13 counts of security fraud, wire fraud, and false statements. In addition to Rep. Collins and his son Cameron, Stephen Zarsky, the father of Cameron Collins' fiancée, is also facing charges.
Rep. Collins, Cameron Collins, Zarsky, and unnamed co-conspirators reportedly avoided $768,000 in losses by selling their stock in Innate Immunotherapeutics Limited before the results of a failed drug trial came to light.
What's the timeline?
Collins sat on the board of Innate Immunotherapeutics Limited, an Australian biotech company that had been working on a drug intended to treat Secondary Progressive Multiple Sclerosis. The company was banking its entire future on the success of this drug, which, according, to the FBI was expected to be worth billions of dollars.
On June 22 of 2017, Collins was attending the annual Congressional Picnic.
Around 6:55 p.m. that evening, while at the picnic, Collins received an email from the CEO of Innate informing the baord of directors that the drug had failed to pass its trials and could not be sold to the public.
At 7:10, Collins responded by email to the CEO saying “Wow. Makes no sense. How are these results even possible???”
At 7:11, one minute after sending that email, Collins tried to call his son Cameron, who was also an investor in Innate. He called seven times before he finally got through to Cameron at 7:16.
At 9:17 that same evening, Cameron drove to his father-in-law Zarsky’s house.
At 9:34, Zarksy’s wife called their broker and told him to sell their shares of Innate
Between June 23 and 26 Cameron also sold off his Shares. Cameron also told a friend about the drug trial, and Zarsky told three additional friends. Rep. Collins himself could not sell his shares because they were held in Australia and “subject to the Australian trading halt," according to the indictment.
On June 26 at the close of the market, Innate announced that the drug trial had failed. On the next trading day, the company’s stock plunged 92 percent.
U.S. Attorney for the Southern District of New York Geoffrey Berman said that this case was a reminder “that this is a nation of laws, and everyone stands equal before the bar of justice.”
Who is Collins?
Collins, who was first elected in 2012, is currently running for a fourth term. Until now he has been considered likely to hold his seat in New York's heavily Republican 27th Congressional District.
Collins, 68, was the first member of Congress to endorse President Donald Trump, saying in February 2016, “We need a chief executive, not a chief politician.” Collins pointed to his own experience as a private sector businessman and said he viewed Trump as “the guy that has been signing the front of a pay check and not the back.”
In 2017, the Office of Congressional Ethics investigated Collins for potential violation of both “House rules, standards of conduct, and federal law.” Collins was accused of using his position in Congress to assist Innate Immunotherapeutics Limited, an Australian biotech company where he was a board member at the time.
In a report dated Oct. 12, 2017, the OCE recommended that the Committee on Ethics of the United States House of Representatives “further review the above allegation because there is a substantial reason to believe that Representative Collins took official actions or requested official actions that would assist a single entity in which he had a significant financial interest, in violation of House rules and standards of conduct.”
Paul Ryan has released a statement
Speaker of the House of Representatives Paul Ryan (R-Wis.) released a statement on Wednesday regarding Rep. Collins which read:
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. Insider trading is a clear violation of the public trust. Until this matter is settled, Rep. Collins will not be serving on the House Energy and Commerce Committee.