Republican Congressman Chris Collins indicted for securities fraud

U.S. prosecutors on Wednesday said Chris Collins, a Republican congressman from Western New York, has been indicted for insider trading in connection with the securities of Australian biotechnology company Innate Immunotherapeutics Ltd.

The indictment also charged Collins's son, Cameron Collins, as well as Stephen Zarsky, the father of Cameron Collins's fiancée.

All three defendants pleaded not guilty on Wednesday before U.S. District Judge Vernon Broderick in Manhattan and were released on $500,000 bail.

"Congressman Collins acted as if the law didn't apply to him," said Geoffrey Berman, U.S. attorney for the Southern District of New York.

Berman at a news conference detailed the charges from an investigation that involved the Federal Bureau of Investigation and the Securities and Exchange Commission.

Collins, 68, has served in the House since 2012 representing parts of Western New York between Buffalo and Rochester and has planned on running for a fourth term in the November congressional elections.

Collins was one of the first members of Congress in 2016 to officially endorse Donald Trump for president.

"The charges that have been levied against me are meritless and I will mount a vigorous defence in court to clear my name," Collins told reporters in Buffalo.

"As I fight to clear my name, rest assured I will continue to work hard for the people and constituents of the 27th Congressional District of New York and I will remain on the ballot running for re-election this November," he said.

It is alleged in the indictment that the congressman, who served on the board of Innate and held 16 per cent of its stock, revealed to his son on June 22, 2017 the results of clinical trials involving an experimental multiple sclerosis drug in a flurry of phone calls, just minutes after being apprised of the trial results from Innate's CEO.

"This was devastating information for the company," said Berman. "Congresssman Collins had an obligation to keep that information secret."

As a result of dumping millions of shares with a series of transactions that night and over the next four days, the defendants avoided $768,000 US in losses, prosecutors allege.

The trial results were made public a week later, with Innate stock losing 92 per cent of its value in off-exchange trading.

"He placed his family and friends above the public good," said Berman.

In Buffalo, Collins acknowledged being disappointed that Innate's drug trials didn't go well.

"We firmly believed we were on the verge of a medical breakthrough," he said.

But, he said, he held on to his personal shares even after learning of the setback. He said the decision not to sell cost him millions of dollars.

"That's OK," he said. "That's the risk I took."

'Partisan witch hunt'

Speaker of the House Paul Ryan said in a statement after the charges were announced that a prompt and thorough investigation by the chamber's ethics committee is required. Ryan said Collins won't serve on the House's energy and commerce committee "until this matter is settled."

The advocacy group Public Citizen filed a request for an investigation of Collins's stock dealings with the Office of Congressional Ethics and the SEC in January 2017.

Collins's spokesperson previously called the probe a "partisan witch hunt."

Berman said since Collins knew he was under scrutiny within the legislative body, he reached out to others to conduct the transactions.

William Sweeney Jr., from the FBI's New York field office, said Collins and the other two defendants lied to investigators when confronted by the accusations.

With files from CBC News and The Associated Press