Watch CBSN Live

Court hearing scheduled for Rep. Chris Collins in insider trading case

CBS: Video of that Chris Collins phone call
CBS: Video of that Chris Collins phone call 00:39

A court hearing is scheduled Tuesday afternoon for Congressman Christopher Collins, who was indicted on insider trading charges in August. The New York Republican is accused of illicitly sharing information with his son about a drug company in which he held the largest shares.

Collins, a New York Republican, is charged with conspiracy, securities fraud, wire fraud, and making false statements to the FBI. He  allegedly shared insider information with his son about Innate Immunotherapeutics, a biotechnology company. Collins held a major stake in the company -- 16.8 percent of its stock -- and he sat on its board.

The hearing is scheduled for Collins and his son Cameron Collins, and his son's fiancée's father Stephen Zarsky. All three face the same charges. Cameron Collins also owned a substantial stake in the company, about 2.3 percent of the company's shares. 

Innate's main business was developing a treatment for secondary multiple sclerosis, which had "few or no alternative treatments," the indictment said. Therefore, the drug, known as MIS416, had enormous potential for profit if it proved successful. 

On June 22, 2017, at 6:55 p.m., Innate's CEO notified the board, including Rep. Collins, that the drug trial had been a "clinical failure." Innate. Collins, who was attending the White House Congressional picnic at the time, replied with dismay, "Wow. Makes no sense. How are these results even possible???" 

One minute later, a series of brief phone calls transpired between the congressman and his son, between 7:11 p.m. and 7:16 p.m. The first six calls, the indictment says, were missed, but in the final six-minute call, Rep. Collins told Cameron Collins "in sum and substance that MIS416 had failed the Drug Trial," information that had not yet been released to the public. Cameron Collins started selling his stock the next morning. He sold 1,391,500 shares over three days, until June 26, when Innate notified the public of the failure of the drug trial. Cameron Collins avoided $570,900 in losses. 

Here is video of Chris Collins on the phone at the White House picnic:

CBS: Video of that Chris Collins phone call 00:39

After Innate's disclosure to the public of the failure of the drug trial, the stock price dropped 92 percent.

Collins, who was the first member of Congress to endorse President Trump, won his bid for re-election in November. There is nothing in the Constitution that disqualifies someone who is indicted on federal charges from serving in Congress, so he could still remain in Congress even if he's convicted. 

View CBS News In
CBS News App Open
Chrome Safari Continue