Scrutiny for Houston congressman's Australian stock purchase

Markets Associated Press

Texas U.S. Rep. John Culberson's purchase of stock in a little-known Australian biotech firm earlier this year has come under scrutiny and appears to be a likely issue as the Houston Republican seeks a 10th term next year.

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Culberson purchased shares of the firm Innate Immunotherapeutics in January a day before the stock spiked, doubling its price in about a month, the Houston Chronicle reported Wednesday. This week, after disappointing test results for an experimental multiple sclerosis drug the firm has been developing, the stock which has since traded around $1 a share now has fallen to less than 5 cents, down from $1.83 per share in Australian dollars from the time just after he bought it.

Culberson is among several GOP lawmakers to buy the stock — Texas Rep. Mike Conaway of Midland is another — in a firm where U.S. Rep. Chris Collins of New York is the biggest investor. A similar purchase by then-Georgia U.S. Rep. Tom Price became fodder for questions earlier this year from Democrats at Price's confirmation hearing to become secretary of health and human services.

Culberson has said his interest in Innate was sparked by unspecific "press reports" and in a written statement to the Chronicle said his investment was motivated by the death of a family friend from multiple sclerosis. Financial disclosure records show he bought between $1,000 and $15,000 in stock.

A Democratic challenger, research physician Jason Westin, has questioned Culberson's interest in the stock because of the absence of published research or significant clinical trial updates about the company's drug.

Whether the stock makes or loses money doesn't matter. Ethics watchdog groups and legal analysts have told the Chronicle that if Culberson and other lawmakers were steered into their investments with non-public information, they could be in potential violation of the Stock Act, which bans insider trading by members of Congress.

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One Democrat, Rep. Louise Slaughter of New York, has asked the Securities and Exchange Commission to investigate "whether the transactions were triggered by insider knowledge." The stock performance and transactions also have attracted the attention of the Australian Stock Exchange.

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Information from: Houston Chronicle, http://www.houstonchronicle.com