US prosecutors have charged Republican congressman Chris Collins for insider trading relating to a drug trial at an Australian pharmaceutical company on whose board he served.
- Insider tips led to trades which helped avert $1 million in losses
- Chris Collins held 17 per cent stake in Innate Immunotherapeutics
- Collins removed from House Energy and Commerce Committee
The indictment also charged Mr Collins’ son Cameron, as well as Stephen Zarsky, the father of Cameron Collins’ fiancee.
According to the indictment, Chris Collins sat on the board of North Melbourne-based Innate Immunotherapeutics and held a 16.8 per cent stake in the company.
The indictment said the congressman passed on non-public tips about Innate’s trial for a drug to treat progressive multiple sclerosis to his son, who then passed the tips to Mr Zarsky.
Cameron Collins, Mr Zarsky and a number of others who they passed the tips on to traded on the information, and avoided more than $US768,000 ($1.03 million) in losses by selling before results of the trial, which ultimately failed, became public, the indictment said.
The company’s stock went on to fall by more than 90 per cent.
“Congressman Collins cheated our markets and our justice system in two ways,” said Geoffrey Berman, US attorney for the Southern District of New York.
“First, he tipped his son to confidential, corporate information at the expense of regular investors and then he lied about it to law enforcement to cover it up.”
House of Representatives Speaker Paul Ryan said he was removing Mr Collins from the House Energy and Commerce Committee and prodded his chamber’s ethics panel to pursue “a prompt and thorough investigation” of the politician.
“Insider trading is a clear violation of the public trust,” Mr Ryan said.
A seat on the Energy and Commerce panel is highly coveted because of its wide jurisdiction.
Mr Collins, 68, was an early supporter of Donald Trump’s successful 2016 White House run, and has been seeking a fourth term in Congress.
Democrats consider him vulnerable in congressional elections this November as they seek to recapture the House of Representatives.