WASHINGTON -- A day after Rep. Chris Collins was heard off the House floor discussing the possible sale of an Australian biotech stock, the company issued a news released further confirming its experimental treatment for multiple sclerosis had failed in clinical trials.
Collins' conversation and the strongly worded news release from Innate Immunotherapeutics prompted Rep. Louise M. Slaughter to say that she would refer the information to congressional ethics panels and federal authorities and ask them to investigate.
And it prompted Anthony Ogorek, a Williamsville financial planner who is a past director of the National Association of Personal Financial Advisers, to say that Collins's actions and the news release that followed raise a serious question.
"The concerning issue is whether he was trying to trade or encouraging someone else to trade based on inside information," Ogorek said.
Collins political adviser, Christopher M. Grant, vehemently rejected the notion that Collins had done anything wrong. Grant said Collins -- Innate's largest shareholder -- had no inside knowledge about the company when discussing the stock with his son Cameron late Wednesday afternoon.
"He did not learn of the release until it hit his inbox along with all other investors last night," Grant said referring to Thursday night.
In addition, Grant said that no stock sale resulted from the conversation Collins had with his son Wednesday.
"Chris was not and did not try to sell any stock " of Innate "on Wednesday or Thursday, nor has he ever," Grant said. "Also, there has not been any appreciable change in the stock price since the most recent news release went public."
Cameron Collins sold his Innate shares in late June, and Grant said that neither the congressman nor his daughter Caitlin could sell their shares now because they are stranded in an account that brokers can't quickly access.
Grant said Collins was discussing "a family stock matter" with his son Cameron when nearby reporters heard the congressman walk by with his cell phone, saying: "Come hell or high water you will have $200,000."
One witness said it appeared the Clarence Republican was discussing someone selling 5 million Innate shares at about 4 cents a share, its trading level in over-the-counter trading in this country late Wednesday.
That witness said it appeared that Collins and whomever he was speaking with were having trouble finding an American broker willing to handle a trade of Innate stock, which was worth 57 cents a share before its bad-news announcement on June 27.
“If we can find a broker in Australia,” Collins was heard to say.
It's unusual for members of Congress to discuss private stock transactions just off the floor of the House, and a source close to Collins said: "He was handling this like a dad, not a politician."
Collins' conversation took on more weight, though, after Innate issued a press release early Friday morning in Australia, which was early Thursday evening in the United States.
The press release said that further study had proved exactly what its June 27 press release had said: that its experimental treatment for secondary progressive multiple sclerosis had failed in clinical trials. While the first news release focused on the results as a whole, the second release said further study was done to see if any individuals had responded positively to the experimental treatment, called MIS-416.
"The first report from this subsequent analysis does not indicate that such a responder group exists," the news release said.
Ogorek said Innate would be a difficult stock for anyone to sell, given that its value plummeted from 57 cents a share before its first announcement that its one and only product had failed to between 4 and 5 cents a share in recent days.
"I think that any broker who was trying to sell any of these shares to a client would not have that client very long," Ogorek said.
This is the second time in a month that investment experts such as Ogorek have raised concerns about Innate trading. On June 21, the company issued a news release saying it had won approval to begin final-phase clinical trials for its MS drug in the United States Just five days later, the company announced that its second-stage clinical trials in Australia and New Zealand had failed.
Trading in Innate's stock skyrocketed in those few days in America, prompting Australian investors to speculate that the company may have performed a "pump and dump" to to boost its stock price before reporting bad news.
Slaughter, a Fairport Democrat, long has raised concerns about Collins' investment in Innate. She previously sent letters of complaint to the Office of Congressional Ethics -- which is looking into Collins' investment in Innate -- the House Ethics Committee, the Securities and Exchange Commission and the U.S. Attorney for the Southern District of New York.
An aide to Slaughter said she would submit the new information about Collins' conversation with his son, and Innate's bad-news release a day later, to those same offices.
Slaughter is the author of the Stop Trading on Congressional Knowledge (STOCK) Act, which bars lawmakers from trading stocks based on their inside knowledge of legislation that could affect the stock price.
And while her concerns about Collins stemmed from the fact that he was promoting Innate to other members of Congress while he was writing legislation that could boost such biotech firms by speeding up their clinical trials, her concerns have now grown far beyond that.
“I think there’s much more here than meets the eye," she said Friday. "When was he informed of the trial results and the fact that this drug is no better than a placebo? Was that before he sold the stock to his friends?"
Hearing that Slaughter was complaining yet again about Collins' investment in Innate, Grant said: "Louise Slaughter is making Captain Ahab of Moby Dick legend look sane. The fact is Chris has complied with all laws and ethics rules when it comes to his personal finances. Just because the Congresswoman yells, screams and circulates false allegations do not make them facts. She should start doing her job in Congress instead playing partisan politics and running a smear campaign against Congressman Collins."
Slaughter says Collins is to blame for his troubles.
"This proves you should not be a stock broker and a congressman in the same building at the same time,” she said.