The charges were announced and the indictment unsealed in New York City on Wednesday.
Also charged with insider trading in the indictment is Collins' son, Cameron, and Stephen Zarsky, the father of Cameron Collins' fiancée, according to the U.S. Attorney's Office in the Southern District of NY.
The charges stem from an ethics investigation that was launched previous year following accusations that Collins shared non-public information about an Australian biotech company.
In October, a congressional ethics investigation determined there was "a substantial reason to believe" Rep. Collins violated federal law when he promoted stock in Innate Immunotherapeutics using insider information.
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Attorneys representing Collins said in response to the indictment that they are confident the congressmen will be "completely vindicated and exonerated", NBC producer Alex Moe reported.
His son then traded on that inside information and passed it to Zarsky, along with numerous unnamed co-conspirators, "so that they could utilize the information for the same objective", according to the indictment.
Prosecutors say the three avoided over $768,000 in losses by trading ahead of the public announcement of the failed drug trials.
The statement indicated that Collins would address the charges later on Wednesday.
Among the charges, the defendants are accused of multiple counts of securities fraud, along with one count of wire fraud, one count of conspiracy to commit wire fraud and one count each of making false statements.