Former Rep. Chris Collins (R-NY) pleaded guilty Tuesday to one count of conspiracy to commit securities fraud and one count of lying to the Federal Bureau of Investigation (FBI). The plea, entered in a Manhattan federal court, followed Collins' resignation from Congress on Monday. The charges stemmed from an August 2018 indictment involving the sharing of confidential information about an Australian biotechnology company where Collins served as a board member.
The case centered on allegations that Collins leaked non-public information about a failed clinical trial for a multiple sclerosis drug. According to prosecutors, Collins placed a phone call from a White House picnic to his son to provide a tip about the trial results before they were made public. This information allowed his son and another individual to sell their stock in the company, avoiding financial losses totaling hundreds of thousands of dollars.
During the court proceedings, Collins admitted he had a duty to maintain corporate confidentiality and expressed regret for his actions. He described himself as "devastated" and in an "emotional state" upon learning the drug trial had failed. U.S. Attorney for the Southern District of New York Geoffrey Berman stated that Collins acted as if the law did not apply to him by tipping his son while serving as a federal lawmaker.
The scale of the case involves hundreds of thousands of dollars in avoided losses for those tipped by Collins. For the former congressman, the legal consequences include a potential prison sentence of up to 10 years, though a plea agreement stipulates he will not appeal any sentence of four years and nine months or less. This sets a precedent for how federal insider trading laws are applied to sitting members of Congress who serve on corporate boards.
Collins is scheduled to be sentenced by Judge Vernon Broderick on Jan. 17. The legal proceedings continue for his son, Cameron Collins, and Stephen Zarsky, who are both expected to enter their own guilty pleas on Thursday. The outcome of these hearings will determine the final criminal penalties for all individuals involved in the coordinated sale of the biotechnology stock.