Insider Trading Charges Make N.Y. House Race More Competitive

(Bloomberg) -- The indictment of Republican Representative Chris Collins doesn’t give Democrats an automatic shot at flipping his upstate New York district but it likely will force the GOP to invest more to try to hold what should have been a safe seat.

Collins, an early supporter of President Donald Trump, had been heavily favored to win re-election in a November election that in other areas of the country is presenting major challenges to Republican control of Congress.

Soon after the indictment on insider trading charges was announced Wednesday, two independent analysts moved the race from safe or solid Republican to likely Republican, a shift that indicates it’s become more competitive.

"Collins was already under investigation by the House Ethics Committee, but the indictment compounds his political problems in a district that should otherwise be safe GOP territory," David Wasserman, House editor of the nonpartisan Cook Political Report, said in a statement.

Collins said on his campaign Facebook page that the charges are "meritless and I will fight to clear my name." He said he’ll continue running for re-election in November.

The allegations against Collins give a boost to Democrat Nate McMurray, the town supervisor of Grand Island, in a western New York district outside Buffalo that overwhelmingly supported Trump in 2016. Democrats would need to take at least 23 Republican-held seats in November to gain a majority in the House.

"It’s confirmation that Chris Collins used his position not to serve the public but to serve himself, his friends and his family," McMurray told reporters Wednesday in Hamburg, New York. "The cheaters in this game need to be thrown out."

Democratic Surge

"A strong Democratic year combined with a potentially damaged candidate means this should be on the competitive radar," according to Kyle Kondik, managing editor of the election forecaster Sabato’s Crystal Ball at the University of Virginia, which also shifted its rating of the race.

Matt Gorman, communications director for the campaign arm of House Republicans, said, “We will let the facts come to light and trust the judicial system as we continue to assess his re-election campaign.”

Collins, 68, and his son were indicted for insider trading related to the shares of an Australian biotechnology firm, Innate Immunotherapeutics Ltd.

Indictment

According to the indictment, Collins, a member of Innate’s board of directors and one of its largest shareholders, had access to nonpublic information about its primary business -- the development of a drug intended to treat a form of multiple sclerosis. The indictment said the congressman tipped off his son to trial results, which weren’t yet public, that showed the treatment had no effect in helping patients. The son passed the information to others, allowing them to avoid more than $768,000 in stock losses, according to the indictment.

Collins’ attorneys, Jonathan Barr and Jonathan New, said they will “mount a vigorous defense to clear his good name.” They added, “It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock. We are confident he will be completely vindicated and exonerated.”

House Speaker Paul Ryan said Collins won’t serve on the House Energy and Commerce Committee until the matter is resolved, and he called for a House Ethics Committee investigation.

Ryan said Collins’ “guilt or innocence is a question for the courts to settle," and added, "Insider trading is a clear violation of the public trust."

Democratic Congressional Campaign Committee spokeswoman Meredith Kelly said in a statement, "Few could have imagined that when Chris Collins promised to ‘drain the swamp’ he was referring to himself." She said the seat "is firmly in play for Democrats.”

Kondik said that even though Trump won the district by 25 percentage points and Collins easily won his last two races, his first race against then incumbent Democrat Kathy Hochul was a close 51 percent to 49 percent win. Collins was the first House Republican to endorse Trump, in February 2016. He was unopposed for renomination this year.

"It’s a very Republican district, but more competitive than that Trump number would suggest," he said.

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