Representative Christopher Collins, who was the first congressman to support Donald Trump's candidacy for President, was arrested yesterday by Federal Prosecutors. The Republican Congressman from New York's 27th Congressional District, who seconded Trump's nomination at the Republican Convention in 2018, has remained close to the White House and to Trump.
in announcing the arrest, Geoffrey S. Berman, the U.S. attorney for the Southern District of New York, said this: Collins "helps write the laws of this country.” But Collins “acted as if the law did not apply to him." (Washington Post, August 8, 2018).
Berman, the prosecutor, is a Republican, first appointed by Trump Attorney General Jeff Sessions to replace Preet Bharaha, whom Trump fired. Berman was confirmed by a panel of judges in April 2018.
Collins was a member of Innate's board of directors and held nearly 17 percent of the stock. As a Board member, he was informed in advance of public announcement that the company’s only drug had failed its clinical tests.
When the drug trial's failure was announced, Innate's stock price plunged 92 percent.
Collins did not trade the millions of shares he owned before the drug trial's failure was made public, prosecutors noted, for 2 reasons. He was already under investigation by the House Ethics Committee, for one. But he also couldn't -- his stock was held in the Australian stock exchange (ASX), and before the the drug trial's failure was announced, Innate asked the Austalian Exchange to halt trading of the stock, which it agreed to do.
This did not affect the U.S. over-the-counter market, where Collins' son's shares were held. Prosecutors allege that Collins passed along secrets to his son, Cameron Collins, in June 2017, and his son then topped off others including his father-in-law to be. The insiders who traded ahead of the announcement, with information, passed by Collins avoided $750,000 in losses.(Source, CBS News).
4 other Republican congressmen as well as former Trump cabinet member Tom Price also invested in Innate, but have not been charged with crimes.
Collin's son and his son's fiancé's father-in-law were charged with Collins.
Listen to the announcement by the Berman and other federal prosecutors here.
Below are the SEC Charges U.S. Congressman and Others With Insider Trading.
FOR IMMEDIATE RELEASE
2018-151
Washington D.C., Aug. 8, 2018 —
The Securities and Exchange Commission today announced the filing of insider trading charges against Congressman Christopher Collins, the U.S. Representative for New York's 27th Congressional District, his son, Cameron Collins, and a third individual, Stephen Zarsky. In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced related criminal charges.
Christopher Collins, who served as an independent director of an Australian biotech company, Innate Immunotherapeutics Ltd., is charged with tipping Cameron Collins after receiving confidential information about negative clinical trial results for Innate's multiple sclerosis drug. Cameron Collins and his girlfriend's father, Stephen Zarsky, are charged with trading and tipping others on the basis of the material, nonpublic information.
The SEC's complaint alleges that Christopher Collins learned of the negative clinical trial results on the evening of June 22, 2017 in an email from Innate's CEO to the board of directors, which stated that the CEO had "extremely bad news" indicating that drug trial results "pretty clearly indicate 'clinical failure'." The SEC alleges that Christopher Collins replied to the CEO's email within minutes, expressing his surprise at the results, and then called and spoke to his son minutes later.
According to the SEC's complaint, later that same evening, Cameron Collins drove to Stephen Zarsky's home and tipped him. The next morning, almost two hours prior to the market opening, Cameron Collins and Zarsky allegedly entered orders to sell Innate shares, which were executed just after the market opened. Over the next two trading days, Cameron Collins allegedly sold a total of nearly 1.4 million Innate shares. According to the complaint, a few hours after the last of these sales, Innate publicly announced the negative results of the clinical trial. The company's stock price then plummeted by more than 92 percent. Through their sales, Cameron Collins and Zarsky avoided losses of more than $700,000. The complaint also alleges that they contacted other friends and family members who also sold Innate shares in advance of the negative announcement.
"We allege that Christopher Collins breached his duty of confidentiality to Innate's shareholders, exploiting his access to nonpublic information about the company's clinical trial results so that his son could avoid significant financial losses," said Stephanie Avakian, Co-Director of the SEC Enforcement Division. "Our laws are designed to prevent and punish such misconduct, which undermines investors' trust in the fairness and integrity of our markets."
"In the hours and days after learning of the drug trial results, Christopher Collins, his son, and their associates exchanged a flurry of calls," said Steven Peikin, Co-Director of the Enforcement Division. "The investigation yielded a detailed footprint left by the defendants, revealing their frantic efforts to sell shares and warn others before Innate announced bad news."
The SEC's complaint, filed in U.S. District Court for the Southern District of New York, charges Christopher Collins, Cameron Collins, and Stephen Zarsky with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Section 17(a) of the Securities Act of 1933. The complaint seeks disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions. It also seeks an officer and director bar against Christopher Collins.
The SEC also announced settled charges today against Lauren Zarsky, Cameron Collins' girlfriend, and her mother, Dorothy Zarsky, for trading on the basis of material, nonpublic information. Lauren Zarsky and Dorothy Zarsky consented to the entry of final judgments without admitting or denying the charges that they sold their shares of Innate based on tips they received from Cameron Collins. Lauren Zarsky agreed to disgorge her ill-gotten gains of $19,440, plus prejudgment interest of $839, and pay a civil penalty of $19,440. Dorothy Zarsky agreed to disgorge her ill-gotten gains of $22,600, plus prejudgment interest of $975, and pay a civil penalty of $22,600. The final judgments, which require court approval, would enjoin Lauren Zarsky and Dorothy Zarsky from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. Lauren Zarsky, a CPA, has also agreed to be suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC's order permits Zarsky to apply for reinstatement after five years.
The SEC's investigation has been conducted by William Max Hathaway, Colby A. Steele, Patrick McCluskey, and Carolyn M. Welshhans in the Enforcement Division's Market Abuse Unit. The case has been supervised by Joseph G. Sansone, Chief of the Market Abuse Unit, and Robert A. Cohen. The litigation will be led by Melissa Armstrong and Cheryl Crumpton. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.
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Collins has announced his determination to fight these charges and his determination to run for re-election in November.
Here is my view of what history will record. Just imagine what you will read in a decade.
Donald Trump, who left office in disgrace rather than face lengthy impeachment charges of treason and constitutional emolument violations, led a notoriously corrupt, even criminal regime, many of whom eventually served prison time.
Meet Christopher Collins.
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August 9, 2018
