December 9, 2019

SEC settles insider trading charges with former US representative and two individuals

Former US Representative Christopher Collins, his son, and another man, have settled insider trading charges by the US Securities and Exchange Commission.  According to the SEC’s complaint, in June 2017, while serving as an independent director on the board of Innate Immunotherapeutics Ltd, Christopher Collins received material non-public information from the company’s CEO, who wrote in an email that he had “extremely bad news” to report regarding the clinical trial results for a multiple sclerosis drug under development by Innate.  Within seconds, according to the SEC, Collins called his son Cameron and tipped him about the clinical trial failure.  During the next two business days, Cameron Collins traded on the non-public information, selling shares of the company and communicating the information to his girlfriend’s father, Stephen Zarsky, who also traded on the information.  According to the SEC, Collins and Zarsky together avoided $700,000 of losses as a result  of the insider tip.  The complaint alleges that Cameron Collins and Zarsky tipped several additional relatives and friends, who also sold their Innate shares.

Collins, Collins and Zarsky consented to the entry of final judgments permanently enjoining them from violating the antifraud provisions of the securities laws.  Once approved by the US District Court for the Southern District of New York, the settlement with former Representative Collins will permanently bar him from acting as officer or director of a public company.  The settlements with Cameron Collins and Stephen Zarsky require disgorgement of the losses they avoided, plus prejudgment interest – altogether $634,299 for Collins and $159,880 for Zarsky.