Chris Collins Insider Trading Lawsuit: Indictment, Sentence, Pardon

The Chris Collins insider trading case ended with the former New York congressman pleading guilty in October 2019 to conspiracy to commit securities fraud and lying to the FBI, receiving a 26-month prison sentence in January 2020, and then walking free in December 2020 after President Donald Trump granted him a full pardon roughly two months into that sentence.¹²

What Collins Did

On the evening of June 22, 2017, the CEO of Innate Immunotherapeutics, a small Australian biotech, emailed the company’s board with confidential news: the drug MIS416 had failed its Phase 2B clinical trial for a severe form of multiple sclerosis. Collins, a director of the company, received the email at 6:55 p.m. while attending the annual Congressional Picnic at the White House. Twenty-one minutes later he called his son Cameron Collins and, over a call lasting more than six minutes, passed along the results.¹

Over the next several days Cameron Collins, his fiancée, her parents (including Stephen Zarsky), and other associates sold about 1.39 million shares of Innate. The company did not announce the trial failure publicly until the evening of June 26, 2017. When markets opened the next day, Innate’s share price collapsed by 92%, falling from $0.45 to about $0.035.³ Selling ahead of the announcement let the group collectively avoid more than $768,000 in losses. Cameron Collins alone avoided about $571,000.⁴

Collins himself did not sell any of his own Innate shares.⁴ Innate announced plans to shut down within months of the trial failure.⁵

The Conflict Behind the Case

Collins represented New York’s 27th Congressional District from 2013 to 2019 and at the same time sat on Innate’s board. He was one of the company’s largest shareholders, having invested roughly $5 million over several years.⁶ The Office of Congressional Ethics had already found “substantial reason to believe” that he shared material nonpublic information about Innate and took official actions to benefit the company, including asking an NIH employee to meet with Innate staff about drug trial designs. The OCE referred the matter to the House Ethics Committee in July 2017.⁷

Indictment, Resignation, and Guilty Plea

On August 8, 2018, a federal grand jury in the Southern District of New York indicted Collins, his son Cameron, and Stephen Zarsky on charges of conspiracy, securities fraud, wire fraud, and making false statements to the FBI.⁸ Collins called the charges “meritless,” briefly suspended his reelection campaign, reversed course within days, and won reelection that November.⁹

He resigned his House seat effective October 1, 2019, one day before a scheduled court appearance.¹⁰ On that date, in U.S. District Court in Manhattan, he pleaded guilty to one count of conspiracy to commit securities fraud and one count of making false statements to law enforcement.¹¹ The false-statements charge stemmed from an April 2018 FBI interview in which he lied about his role in tipping his son.¹

Sentence

On January 17, 2020, U.S. District Judge Vernon S. Broderick sentenced Collins to 26 months in prison, with concurrent terms on each count, plus a $200,000 fine and one year of supervised release. The criminal case was docketed as No. 1:18-cr-00567.⁴¹² He reported to a minimum-security federal prison in Pensacola, Florida, in October 2020.⁹

Co-Defendants and SEC Settlements

Cameron Collins and Stephen Zarsky each pleaded guilty in October 2019 to one count of conspiracy to commit securities fraud.¹³ Cameron Collins was sentenced to five years of probation, six months of home confinement, 500 hours of community service, and a $150,000 fine. Zarsky received four years of probation and four months of home confinement with no fine.¹⁴

In a parallel SEC civil enforcement action (Case No. 1:18-cv-07128), all three men settled on December 9, 2019. Christopher Collins agreed to a permanent bar from serving as an officer or director of any public company. Cameron Collins agreed to disgorge $634,299 in avoided losses and prejudgment interest; Zarsky agreed to disgorge $159,880.¹⁵ The SEC filed a separate civil complaint against Dorothy Zarsky, Stephen Zarsky’s wife, for selling her 50,000 Innate shares on the same tip. She consented to a judgment requiring $22,600 in disgorgement, $975 in prejudgment interest, and a $22,600 civil penalty, without admitting or denying the allegations.¹⁶

The Trump Pardon

On December 22, 2020, about two months into his 26-month sentence, Collins received a full pardon from President Trump and was released from the Pensacola facility.² The White House said the pardon was granted at the request of “many” members of Congress. Collins had been the first sitting House member to endorse Trump’s 2016 campaign and remained a vocal defender throughout Trump’s presidency.¹⁷ The pardon wiped out the prison term but did not disturb the SEC settlement or the permanent officer-and-director bar he agreed to in the civil case.¹⁵

1
U.S. Department of Justice. Former Congressman Christopher Collins Sentenced in Insider Trading Scheme and Lying
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Spectrum News. President Trump Grants Full Pardon to Former Rep. Chris Collins
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U.S. Securities and Exchange Commission. SEC Complaint, Innate Immunotherapeutics
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CNBC. Chris Collins Sentenced to 26 Months for Insider Trading Tip
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STAT News. Innate Immunotherapeutics Closure
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KQED. Innate Immunotherapeutics
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U.S. House Committee on Ethics. OCE Referral Regarding Rep. Chris Collins
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Politico. GOP Rep. Collins Indicted, Charged with Securities Fraud
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City & State NY. A Timeline of the Chris Collins Case
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NPR. GOP Rep. Chris Collins Resigns Ahead of Reported Guilty Plea on Insider Trading
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U.S. Department of Justice. Congressman Christopher Collins Pleads Guilty to Insider Trading Scheme and Lying to Federal Agents
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U.S. District Court, SDNY. Collins Sentencing Submission, Case 1:18-cr-00567-VSB
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U.S. Department of Justice. Cameron Collins and Stephen Zarsky Plead Guilty in Insider Trading Scheme
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WGRZ. Zarsky Sentenced to 4 Years Probation in Insider Trading Scheme
15
U.S. Securities and Exchange Commission. SEC Litigation Release No. 24687
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U.S. Securities and Exchange Commission. SEC Litigation Release No. 24236
17
CNN. Congressman Chris Collins Endorses Donald Trump