Cameron Collins, son of the 68-year-old legislator, was also arrested, along with Stephen Zarsky, whose daughter is engaged to the younger Collins.
The charges, brought by the Manhattan U.S. Attorney's office, relate to securities of Innate Immunotherapeutics, an Australian biotechnology company on whose board Collins served.
Lawyers for Collins released a statement expressing confidence he would be "completely vindicated and exonerated".
Collins, a Republican who represents the 27th District of NY, covering the suburbs of Buffalo and Rochester, turned himself in to the FBI on Wednesday and is expected to appear in Manhattan federal court later in the day. They say Zarsky traded on it and tipped off at least three others.
FBN's Ashley Webster on the indictment of Rep. Chris Collins, (R-N.Y.), on charges of insider trading.
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"While his guilt or innocence is a question for the courts to settle, the allegations against Rep. Collins demand a prompt and thorough investigation by the House Ethics Committee", said House Speaker Paul Ryan, who took Collins off the powerful House Energy and Commerce Committee hours after the indictments were made public. In addition, the watchdog group alleged Collins used his office to benefit the company by mentioning certain drugs at committee hearings and pushing Innate drugs to National Institute of Health officials.
Attorneys for Cameron Collins said, "We intend to mount a vigorous defense on behalf of our client".
Chris Collins, his son and Zansky avoided $768,000 in losses, according to the indictment.
The SEC has sought to ban Collins from being a director of a publicly traded company and for his co-defendants to forfeit the money they saved through the sale of Innate stock. Shares dropped 92% after the announcement. Over-the-counter trading continued, however, in the US, where Cameron Collins' and Zarky's shares were held.
Collins is estimated to be the 13th wealthiest member of Congress, with a projected net worth of $44 million. "Insider trading is a clear violation of the public trust".