Investigation of Collins stock trades takes serious turn with referral to House panel - The Buffalo News
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Investigation of Collins stock trades takes serious turn with referral to House panel

WASHINGTON – The ethics investigation into Rep. Chris Collins and his stock trades took a serious turn Monday, as the House Committee on Ethics confirmed that it is probing the matter and will continue to do so until at least mid-October.

The ethics panel said in a news release it received a referral from the Office of Congressional Ethics – an independent investigative body – regarding Collins on July 14.

The Office of Congressional Ethics makes such referrals in less than 40 percent of cases it investigates, and according to the office's rules, it does so only when it has "substantial reason to believe” that a violation of law or House rules may have occurred.

In its statement, the House Ethics Committee said it would – as it can under law – take another 45 days to continue an investigation into Collins' alleged actions. The committee said it would announce its course of action regarding Collins on or before Oct. 12.

Neither the Office of Congressional Ethics nor the House Ethics Committee would offer further comment on the investigation, which stems from Collins' investment in an Australian biotech firm called Innate Immunotherapeutics and his habit of touting the company's stock to fellow members of Congress as well as prominent Buffalo-area residents.

Public Citizen's Congress Watch, Fairport Democrat Rep. Louise M. Slaughter and several of Collins' constituents filed complaints with the Office of Congressional Ethics regarding Collins, a Republican from Clarence.

The allegations against him include possible violations of the STOCK Act – a law that aims to bar lawmakers from trading stocks based on inside knowledge of congressional actions – and discussing stock trades on House property.

Collins colleagues in Congress say he pushed biotech stock tip

The Ethics Committee's statement shows the Collins investigation has moved onto a new and more serious phase, said Craig Holman, the government affairs lobbyist at Public Citizens' Congress Watch, a left-leaning government watchdog.

"If the House Ethics Committee did not want to pursue this, it would have dismissed this matter out of hand in the first 45 days," said Holman, who filed the first ethics complaint against Collins Jan. 4. "This means that the allegations are serious and that the House Ethics Committee is taking a close look at it."

Asked for comment, Collins' spokesman, Sarah Minkel, said: “The House Ethics Committee is reviewing a report from the Office of Congressional Ethics in regards to the false accusations brought about by Congresswoman Louise Slaughter and her allies in a partisan witch hunt against Congressman Collins. Today’s announcement was expected and is nothing more than a pro forma delay because Congress is currently in its August recess. Congressman Collins has followed all ethical and legal guidelines when it comes to his personal investments and he looks forward to their review.”

Collins has been investing in Innate for more than 15 years, and is up for re-election to the company's board of directors later this week. He has insisted that his investments in the company, and the fact that he's long been talking up its stock, stem from his interest in its key product: an experimental treatment for secondary progressive multiple sclerosis.

Innate announced in late June that its treatment failed in clinical trials. That prompted the value of its stock to fall, meaning Collins lost at least $5 million on his investment virtually overnight.

Stock Collins bought and touted collapses after drug trial failure

But, the ethics complaints on Collins stem from his actions more than a year earlier, when he expanded his investment at a discount in a private stock offering. At the same time, Congress was working on the 21st Century Cures Act, a law that passed late last year that includes a provision, authored by Collins, that aims to speed up clinic trials for biotech companies such as Innate.

That fact prompted Slaughter – who authored the STOCK Act – to accuse Collins of insider trading.

"Beyond the original STOCK Act that said members and staff couldn’t trade on non-public information, Congressman Collins went further and wrote an amendment to the 21st Century Cures Act that benefited him personally,” Slaughter said Monday.

The allegations against Collins go beyond his own investments. Then-Rep. Tom Price, a Georgia Republican who now serves as President Trump's health secretary, bought Innate stock at a discount, too, saying he heard about it from Collins. Price later sold his shares at a profit of $150,000, according to the public disclosure statements he filed.

Several other House members also invested in Innate, as did several Buffalo-area business and community leaders. One of those investors told The Buffalo News he heard about Innate from Collins during a meeting in a congressional office building, which could be a violation of House rules.

Complaints filed with the Office of Congressional Ethics detailed all of those allegations. The Buffalo News reported in May that the Office of Congressional Ethics was investigating Collins' alleged actions, but Monday's announcement from the House Ethics Committee was the first sign that investigators had reason to believe that some of the allegations against Collins may be true.

Established in 2008 after a wave of congressional scandals, the Office of Congressional Ethics is a nonpartisan investigative body that reviews complaints against members of Congress filed by watchdog groups, citizens and other lawmakers.

The office dismisses most of the complaints it receives, but when its board believes that wrongdoing may have occurred -- as it believes regarding Collins -- it refers the matter to the House Ethics Committee.

"The OCE is a fact-finding office," the office said, on its website. "A recommendation for further review does not constitute a determination that a violation occurred, only that the OCE has a substantial reason to believe a violation occurred."

Amid controversy, other House members bought stock Collins touted

It's up to the Ethics Committee to decide whether Collins violated any House rules or laws. Under House rules, the committee doesn't disclose when it begins an investigation into a lawmaker's actions, but it must disclose the probe if it decides to extend its investigative work by another 45 days.

That's what the Ethics Committee did Monday.

Now, the committee – consisting of an equal number of Democrats and Republicans – and its investigators face a deadline of sorts imposed by House Rules. The committee must say where the Collins probe stands by Oct. 12.

In addition, the committee almost certainly will release the Office of Congressional Ethics report on Collins on or before Oct. 12. From there, the committee can decide whether to end its investigation of Collins without taking action or whether it will recommend that the House punish him.

Possible punishments for congressional wrongdoing range from a fine to a reprimand to a censure to expulsion.

Holman noted that the Ethics Committee is noted for not taking action against House members -- and the committee itself warned not to read too much into the fact that it is investigating Collins.

"The committee notes that the mere fact of a referral or an extension, and the mandatory disclosure of such an extension and the name of the subject of the matter, does not itself indicate that any violation has occurred, or reflect any judgment on behalf of the committee," the panel's news release stated.

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