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US Congressman arrested over insider trading in biopharma firm

Published on 09/08/18 at 11:25am
Image Credit: Yahoo, https://www.flickr.com/photos/yodelanecdotal/18175734466/

A Republican Congressman has been arrested by the FBI over on charges of insider trading with shares in Australian biopharmaceutical firm Innate Immunotherapeutics, a company for which he serves as a board member.

Chris Collins, the United States Representative for New York’s 27th congressional district and the first sitting member of congress to endorse current President Donald Trump, reportedly turned himself into the government over the charges. However, just hours after his arrest, he told reporters at a press conference: “The charges that have been levied against me are meritless and I will mount a vigorous defence in court to clear my name.”

Collin’s son Cameron and Stephen Zarksy, the father of his son’s fiancée, were also indicted in an orchestrated effort to tip off others with inside information and engage in timely trading to avoid huge losses. The charges allege that Collin’s received an email from Innate CEO Mondher Mahjoubi at the White House’s annual congressional picnic in June last year, warning him that the company’s only drug, the multiple sclerosis treatment MIS416, had failed to show efficacy over placebo in its latest trials.

“In the hours and days after learning of the drug trial results, Christopher Collins, his son, and their associates exchanged a flurry of calls,” Steven Peikin, co-Director of the SEC’s Division of Enforcement, said in a statement. Four days later, when the trial results were made public, Innate’s shares were decimated, falling 92%.

Through these calls and subsequent sell-offs, it is alleged that Collins and his collaborators managed to avoid losses of more than $768,000 by disposing of 1.39 million shares. “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.” Peikin added.  

"Without my investments and steadfast financial support, the company would have gone under," Collins said on Wednesday. "Of all the things I wanted to accomplish in my life, finding a cure for secondary progressive MS was at the top of my list. After years of blood, sweat and tears we firmly believed we were on the verge of a medical breakthrough."

Collins did not, however, trade his own stocks, which were held in Australia and affected by a trading halt. "That's ok, that's the risk I took," he added. "I may have lost most of my money I invested... but I took the chance to bring relief to those who deal with the dreadful disease."

Innate has distanced itself from the scandal, saying in a statement: “The Company and its Directors/Officers (excepting Mr Collins) are not under investigation. The Company considers the ongoing investigation to be a private matter to Mr Collins,” adding that he had not been involved in the guidance of the company since May.

Matt Fellows

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