WASHINGTON ― Rep. Tom Price (R-Ga.), President Donald Trump’s pick to run the Department of Health & Human Services, was one of only six new U.S. investors invited to purchase stock in an Australian biotech firm at a discounted price.
The new information provided in a Wall Street Journal report contradicts the sworn testimony Price gave to two Senate committees on Jan. 18 and Jan. 24. Price clearly stated that the discounted stock price that he was offered was “available to every single individual that was an investor at the time.” The firm, Innate Immunotherapeutics, told the Wall Street Journal that this was not true.
Price was invited to purchase the discounted shares of Innate Immunotherapeutics as a part of its friends-and-family program. The company’s CEO, Simon Wilkinson, told the Journal that investors who had previously purchased discounted stock were invited to “make friends and family aware of the opportunity. … We are always looking to increase our shareholder base. But those new parties have to meet the definition of sophisticated financial investor.” In total, 18 U.S. investors were allowed to participate in the discounted stock offer.
Rep. Chris Collins (R-N.Y.), an Innate Immunotherapeutics board member and owner of 17 percent of the company’s stock, invited Price to participate in the discounted stock purchase program. Collins was also the first person to tell Price about the company before Price purchased his first shares on the common market.
According to the Journal, the discounted stock purchase program was offered to all investors in Australia and New Zealand, but only to a limited selection of U.S. investors. Australian investors were limited in the number of shares they could purchase at the lower price, but U.S. investors such as Price could purchase an unlimited amount of shares.
Collins reportedly told Price about the offer to purchase discounted shares in the company. Price asked if he could participate and Collins sent him the documents to do so.
As HuffPost previously reported, Price purchased 400,613 shares at the discounted rate of $0.18 per share. This provided an instant profit of $57,080. His investment has increased in value more than fourfold to a total worth of at least $520,000.
When Price appeared before the Senate Finance Committee, Sen. Ron Wyden (D-Ore.) said that it was hard to see Price’s purchase of discounted stock not available to all shareholders as “anything but a conflict of interest, and an abuse of positions.”
Just like the broader public, it is illegal for members of Congress to purchase or sell stock based on nonpublic information. The 2012 STOCK Act reinforced prohibitions against lawmakers engaging in insider trading. Both Price and Collins claim that they did not receive or provide nonpublic information. Democrats have called for the Securities and Exchange Commission and the Office of Congressional Ethics to investigate both for potential violations of the STOCK Act, insider trading laws and House rules limiting gifts members can accept.
Innate Immunotherapeutics offered the discounted stock as part of its effort to raise money to finish clinical trials for a drug to treat secondary multiple sclerosis. The company hopes to fast-track trials and regulatory approvals in its bid to sell to a larger pharmaceutical company.
Price and Collins were both engaged in legislative efforts to pass the 21st Century Cures Act in 2016. The legislation included specific language to speed up the process of drug approvals at the Food and Drug Administration for Innate Immunotherapeutics’ drugs, as well as others.