Former US Representative and convicted criminal Chris Collins received a federal pardon late last month from President Trump. Collins pled guilty to insider trading, a crime notoriously difficult to prove, last September. He had passed non-public information about a failed drug trial to his son, who immediately sold thousands of shares of the pharmaceutical company’s stock. The FBI arrested Collins over a year after the fact, over which time the general public was none the wiser. How did a crime as blatant as Collins’ pass through congressional safeguards against such behavior? The fault lies in both a lack of timely disclosure requirements and a culture of congressional self enrichment.
Collins’ actions represent textbook insider trading: he received a tip about the failed drug trial from Innate Immunotherapeutics’ CEO while at a White House picnic and frantically called his son seven times to give him the news, after which his son acted on the tip by selling off his stock. Over the following days, his son, his son’s fiancée, and her father would sell their shares in Innate, but not Collins himself. Since no personal trades occurred, no information about the activity resulting from his tip appeared on his congressional financial disclosures, despite the stock losing over 90% of its value soon after the trades.He held $1-5 million in Innate stock: it’s large decline in value should have been easily observed, but he was not required to disclose this in his 2017 Annual Report. The first reference to Innate’s catastrophic drop in value comes in a June 2018 Periodic Transaction Report, in which he discloses a sale of his entire position in Innate, now worth only $15-50,000. There is no indication that this same position was once around one hundred times as valuable.
In response to the question, ‘Who in Congress have you talked with about Innate?’ Collins replied “The bigger question would be: Who haven’t I talked to?” This exchange occurred in a 2017 interview [referenced by the New York Times] that was conducted as part of an Office of Congressional Ethics investigation into Collins’ holdings in the New Zealand-based pharmaceutical firm. His family members also owned stakes in Innate, as did four other Republican legislators, many members of his congressional staff, prominent Buffalo businesspeople, and other well connected Washingtonians. Despite the investigation finding evidence to suggest Collins violated federal law in his dealings with Innate, Collins retained his US House seat and committee positions until his August 2018 arrest. Even after being charged with insider trading and being stripped of his seats by Speaker of the House Paul Ryan, he ran for and won reelection in New York’s heavily Republican 27th district. He would eventually resign, hours before pleading guilty to insider trading, in September 2019.
Trump’s pardon of Collins has been decried as a politically motivated favor to his earliest congressional supporter, and it is. In an earlier article, we discussed Collins’ conviction as being emblematic of a culture of corruption: “Given how blatantly Collins tried to play the system, he must have operated under the assumption that he could get away with it. In this case he didn’t, but more damning still is the implication that he was operating in an environment where he assumed that he would.” With his pardon after serving less than three months of his twenty six month sentence, perhaps he did get away with it.