Securities Regulation Daily Former congressman sentenced to 26 months for insider trading
Tuesday, January 21, 2020

Former congressman sentenced to 26 months for insider trading

By Amy Leisinger, J.D.

Following the fraudulent disclosure of material, nonpublic information, he also lied to the FBI to conceal his activities, according to the DOJ.

The Department of Justice has announced that former Rep. Christopher Collins (R-NY) has been sentenced to 26 months in prison for participating in a scheme to commit insider trading and for making false statements to federal law enforcement agents when interviewed about his conduct.

"Lawmakers bear the profound privilege and responsibility of writing and passing laws, but equally as important, the absolute obligation of following them," said U.S. Attorney Geoffrey Berman.

Misconduct. According to the DOJ, Rep. Collins learned of nonpublic, negative trial results for a multiple sclerosis drug developed by Innate Immunotherapeutics as an Innate shareholder and board member. The drug trial results were highly confidential, and, as an insider who owed duties of trust and confidence to Innate, Christopher Collins was obligated to keep the results secret until Innate publicly released them.

However, the DOJ alleged, Rep. Collins tipped his son, Cameron Collins (also an Innate shareholder), as to the negative results. His son then told his fiancee’s father, Stephen Zarsky, and other individuals—all Innate shareholders. The shareholders then traded on the information, selling nearly 1.7 million Innate shares in advance of the company’s public announcement of the negative results, the DOJ stated. Innate’s stock fell 92 percent after announcing the drug’s failure, and the shareholders avoided losses of over $700,000.

According to the DOJ, Rep. Collins initially told law enforcement officials that he had not shared the results of the failed drug trial with anyone and that his son had told him that he (Cameron Collins) intended to sell shares due to concerns about a trading halt in Innate shares.

Sanctions. Rep. Collins pleaded guilty to insider trading, and Cameron Collins and Zarsky also pleaded guilty to participating in the scheme. In addition to the prison term, Christopher Collins was sentenced to one year of supervised release and ordered to pay a fine of $200,000. He resigned his seat in Congress on September 30, 2019.

To settle related SEC allegations, the former congressman agreed to an officer/director bar, and Cameron Collins and Zarsky agreed to disgorge their avoided losses plus interest, totaling $634,299 and $159,880, respectively.

Attorneys: Jonathan R. Barr (Baker & Hostetler LLP) for Christopher Collins. A. Damian Williams, U.S. Attorney's Office, for the United States.

MainStory: TopStory Enforcement FraudManipulation NewYorkNews

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