"Makes no sense. How are these results even possible???"

A note on the absolute possibility of bad results.

A former US Congressman named Christopher Collins resigned earlier this year amidst an insider trading scandal around a small Australian biotech company called Innate Immunotherapeutics.

Collins had amassed a well-documented & large position in the stock, and according to his own statements, really believed in it.

“One of the things was, ‘Who in Congress have you talked with about Innate?’” Mr. Collins said of the company, Innate Immunotherapeutics, in a 2017 interview. “The bigger question would be: Who haven’t I talked to?”

Anyhow, one day in 2017, this went down:

On or about June 22, 2017, at approximately 6:55 p.m., Innate’s CEO sent an email describing the Drug Trial results to the company’s Board of Directors, including CHRISTOPHER COLLINS. The email explained to Innate’s Board of Directors for the first time that the Drug Trial had been a failure. The email began, in part, “I have bad news to report,” and continued to explain that “the top line analysis of the ‘intent to treat’ patient population (ie every subject who was successfully enrolled in the study) would pretty clearly indicate[s] ‘clinical failure.’” The email continued, “Top-line 12-month data . . . show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo,” and concluded by stating, “No doubt we will want to consider this extremely bad news. . . .”

It gets better. Emphasis mine:

At the time CHRISTOPHER COLLINS received this email, he was attending the Congressional Picnic at the White House. At 7:10 p.m., CHRISTOPHER COLLINS replied to the email, stating, in part, “Wow. Makes no sense. How are these results even possible???

He directed his son to trade on this material non-public information, of course, and was caught, of course.

I’m enamored with his reaction: How are these results even possible????Well, Chris, where do we start? It actually makes a lot of sense. These results were always possible. As possible as your car not starting on a cold morning, or your dog chewing up your favorite shoes.

I have questions about the whole scenario. Who was advising Chris, if anyone? Did he ever have a lawyer, an adviser, an accountant? Or just cheerleaders & co-conspirators? Is this how most Congressional representatives invest?

Imagining things going poorly is not fun, and Chris perhaps didn’t want to imagine the possibility. But you must. We must. It’s part of the game.

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Robinson Crawford, CFP®

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