Insider Trading For Dummies, With Chris Collins, New York Republican And Early Trump Supporter

Listen, New York Republican congressman Chris Collins is hardly the first politician to engage in a “little” insider trading and/or to facilitate insider trading by others, and he most assuredly won’t be the last. 

Insider trading goes on all day, everyday and I’d be willing to bet there are government officials who are effectively engaged in insider trading right now, as I write this. So let’s not pretend Collins is the one “bad apple” in the “bunch” (so to speak).

That said, Wednesday’s bombshell indictment is amusing, and you probably already know why. If not, see the tweet below for a hint.TrumpCollins

See, Collins was one of the first two congressmen to endorse Donald Trump for President.

Eight months after Trump kicked off his campaign on a rather dubious note by riding a golden escalator to a press conference during which he branded Mexicans “rapists” (among other things), Collins showed up on Fox for an interview with Lou Dobbs. In that February 2016 interview, an inquisitive Dobbs asked the New York lawmaker to explain why he refused to join the establishment’s “jihad” against Trump. Here’s what Chris came up with:


There are a lot of great soundbites in there, not the least of which was Collins explaining how “there are a lot of similarities between myself and Mr. Trump”, a contention that’s especially hilarious in light of Wednesday’s news.

Also note how Dobbs accused the Republican establishment of being a nefarious gang of “silly” folks who were engaged in a conspiracy to “subvert the will of the voter in a primary”. Lou went on to list the co-conspirators, faulting “lobbyists”, “K Street”, and “special interests,” for their respective roles in what Fox claimed was a concerted effort to stop Trump. That, Lou said, “just makes people’s blood boil.”

The overarching message in that clip seemed to be that Trump was the man for the job when it came to upending the establishment and “draining the swap”. As you can see, Chris Collins was all aboard the Trump train.

Well I don’t know about you, but from where I’m sitting, nothing says “swamp creature” quite like engaging in insider trading with your son while hanging out at the White House congressional picnic, which is exactly what Collins apparently did. Have a look at this hilarious bit from the charges filed against the congressman on Wednesday:


So what you’re reading there is an account of Collins receiving an e-mail from the CEO of an Australian pharmaceutical company called Innate Immunotherapeutics on whose board Chris sat. Collins is also the largest shareholder. In that e-mail (dated June 22, 2017), the CEO told board members that the company’s lead drug candidate – MIS416, intended for the treatment of multiple sclerosis – had failed in a trial. Specifically, the results indicated that the drug “lacked therapeutic value”. As you can see from the above, Chris was incredulous.

Wow. Makes no sense.

But while Chris had a hard time “making sense” of the trial results, he had no trouble whatsoever deciding what it “made sense” for his son Cameron to do with that (very) material non-public information. Cameron should probably sell, which is why a panicked Chris called his son six times in five minutes, before Cameron finally picked up.

What did Cameron do next? Well, he did what one does with material non-public information that bodes ill for a stock: he sold his shares. But not immediately.

Innate trades on the OTC market which was closed when Chris first passed the information to his son at 7:16 PM on June 22, 2017. Clearly concerned and not wanting to wait even a second longer than he had to when it came to unloading the position, Cameron put in a sell order twelve hours later. Some unfortunate soul hit the bid as soon as the market opened. He would go on to place some 53 more sell orders over the next several sessions.


Between June 23, 2017, and June 26, 2017, Cameron unloaded nearly 1.4 million shares of Innate. The indictment alleges that in one particularly egregious instance, he placed a sell order for 50,000 shares while on the phone with his father.

On June 27, 2017, the company made the results of the trial public. The shares collapsed 92%. Here’s an annotated visual:


Those trades allowed the younger Collins to avoid more than a half million dollars in losses.

And it didn’t stop there. Cameron allegedly passed the information on to his fiancée, his soon-to-be-father-in-law (one Stephen Zarsky), Zarsky’s wife and another “friend”.

The fiancée sold 40,464 shares seven minutes after Cameron’s first sale on June 23 and Stephen Zarsky hilariously put in a limit order $0.11 below the previous day’s close to sell 303,005 shares (his entire position) that morning. Just read this:


And it just goes on, and on, and on.

Chris Collins surrendered to the FBI on Wednesday morning and his lawyers are trying their best to put on a brave face. “We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name,” Collins’ lawyers, Jonathan Barr and Jonathan New of BakerHostetler said in a statement, adding this:

It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock. We are confident he will be completely vindicated and exonerated. Congressman Collins will have more to say on this issue later today.

Yeah, ok guys. I’m not sure that’s going to cut it here, especially considering the fact that the House Ethics Committee was already sniffing around on this.

“The advocacy group Public Citizen asked the Office of Congressional Ethics and the Securities and Exchange Commission to investigate Collins’ stock dealings in January 2017”, NBC notes on Wednesday, adding that “the group said it was concerned he had purchased millions of shares of Innate in 2016 while also sponsoring legislation that could benefit the firm.” Here are some excerpts from the official review:

On July 14, 2017, the Office of Congressional Ethics transmitted a referral to the Committee on Ethics of the United States House of Representatives regarding Rep. Chris Collins.

Nature of the Review

Representative Collins is a board member of Innate Immunotherapeutics Limited (“Innate”) and holds stock in the company.  Representative Collins may have shared material nonpublic information in the purchase of Innate stock.  If Representative Collins shared material nonpublic information in the purchase of Innate stock, then he may have violated House rules, standards of conduct, and federal law.

Representative Collins 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.  If Representative Collins purchased discounted 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, then he may have violated House rules, standards of conduct, and federal law.

Representative Collins attended a meeting at the National Institutes of Health (“NIH”) in November 2013.  In that meeting, Representative Collins discussed Innate and requested that an NIH employee meet with Innate employees to discuss clinical trial designs.  If Representative Collins took official actions or requested official actions that would assist a single entity in which he had a significant financial interest, then he may have violated House rules and standards of conduct.

Meanwhile, the SEC has also filed charges against Collins. Here’s Steven Peikin, co-director of the SEC’s enforcement division:

In the hours and days after learning of the drug trial results, Christopher Collins, his son, and their associates exchanged a flurry of calls. 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.

Apparently, the regulator settled charges against Lauren Zarsky (the fiancée) and her mother, Dorothy Zarsky. The pair didn’t admit or deny wrongdoing. Instead, they agreed to fork over any “ill-gotten gains” and pay some fines, the SEC says.

Do note that Collins has variously suggested the Robert Mueller probe should be shut down, but that’s not even the punchline. The punchline, rather, is the following February 2017 interview between Collins and Chris Cuomo in which the lawmaker dismisses CNN’s questions about the “constant commingling of family, business and the public” on the way to insisting that “no elected official should have to release their tax returns.”

Nothing further.

Well, nothing further except for the indictment.

Full indictment



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