Monday, 15 October, 2018

Australian pharmaceutical company caught up in USA congressman insider trading scandal

Rep. Chris Collins R-NY. speaks in Cleveland Rep. Chris Collins R-NY. speaks in Cleveland
Lance Thomas | 09 August, 2018, 01:41

Collins is being charged with 13 counts of security fraud, wire fraud, and false statements. Her father, Stephen Zarsky, then began telling his friends, as well as his brother and sister, to sell their shares.

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

According to a grand jury's indictment, Collins in June 2017 passed along material that was nonpublic regarding the results of a drug trial-meant to treat a form of multiple sclerosis-so his son "could use that information to make timely trades in Innate stock and tip others". The company was banking its entire future on the success of this drug, which, according, to the Federal Bureau of Investigation was expected to be worth billions of dollars.

At 7:11, one minute after sending that email, Collins tried to call his son Cameron, who was also an investor in Innate.

Collins was attending a congressional picnic at the White House when he got the email. At 7:10 p.m., he responded to the CEO: "Wow".

The charges follow a review by the Office of Congressional Ethics previous year, which concluded that Collins "may have shared material nonpublic information in the purchase of Innate stock", and that he "may have also purchased discounted Innate stock that was not available to the public and that was offered to him based on his status as a Member of the House of Representatives".

At 9:17 that same evening, Cameron drove to his father-in-law Zarsky's house.

The Daily Beast reported that nearly 30 per cent of Innate was owned by Collins or his associates including his two children, four campaign donors, and his chief of staff, and six Republican congressman.

Over the following three days, Cameron Collins sold 1.39 million shares.

Following the indictments, Politico's Jake Sherman on Wednesday tweeted that in January of 2017, he had overheard Collins "talking loudly into a phone just off the House floor, bragging about how many 'millionaires I've made in Buffalo, '" by sharing a stock tip. Then, on June 27, the company announced to the public that the trial had failed.

"These charges are a reminder that this is a nation of laws, and that everybody stands equal before the bar of justice", U.S. Attorney Geoffrey Berman said at a news conference in Manhattan.

It's not clear why Collins first invested in the Sydney company in 2005. 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".

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.

It is relatively rare for prosecutors to indict a sitting elected official, particularly in an election year, and in the case of Collins, prosecutors at the Southern District of NY carefully weighed when to bring the charges, staying mindful of the upcoming election cycle in November, according to people familiar with the matter.

"Insider trading is a clear violation of the public trust", Mr Ryan said.

The House Ethics Committee last October disclosed that it was investigating Collins for potentially violating federal law and House rules regarding insider trading.

It voted unanimously to send its case to the House Ethics Committee.

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