The former chief executive of Emergent BioSolutions, Robert Kramer, has been sued by the New York Attorney General’s office for allegedly engaging in insider trading related to the company’s COVID-19 vaccine. The lawsuit claims that Kramer profited over $10 million by selling his company shares while having knowledge of contamination issues affecting the vaccine’s production.
Emergent BioSolutions, a government contractor based in Baltimore, was responsible for mass-producing vaccine doses, including those for the AstraZeneca COVID-19 vaccine. The company faced significant challenges, with approximately 400 million doses destroyed in 2021 due to contamination at its facility. According to the allegations, before these contamination issues were made public, Kramer sold his shares and collected $10.1 million from these transactions.
New York Attorney General Letitia James emphasized the seriousness of the allegations, stating, “Corporate executives who use insider information to illegally trade company stocks and make a profit betray the public’s trust.” She highlighted that at a critical time during the COVID-19 pandemic, Kramer exploited his position to profit while being aware of the significant production challenges facing Emergent.
The lawsuit seeks damages, the return of profits gained from the alleged insider trading, and costs associated with the legal proceedings. Additionally, it was revealed that Emergent had paid $900,000 in penalties for allowing Kramer’s trading plan, which was deemed a violation of New York’s Martin Act prohibiting insider trading.
Emergent BioSolutions had announced contracts with AstraZeneca in the summer of 2020, valued at a combined $261 million, to manufacture a large-scale supply of the COVID-19 vaccine. Following this announcement, the company’s stock price surged by 43.6%, rising from $94.99 to $136.49. However, starting in September and early October 2020, Emergent encountered manufacturing difficulties and contamination issues that were known to Kramer.
The lawsuit details that on October 6, 2020, an executive vice president shared a presentation with Kramer, which outlined problems with contaminated batches of the vaccine. By October 13, 2020, Emergent had concluded that multiple vaccine batches would likely be lost due to these contamination concerns. Despite this knowledge, Kramer initiated a stock trading plan in mid-October through his investment advisor, allowing him to sell shares at predetermined dates and prices.
The legal action claims that Kramer signed this trading plan on November 13, 2020, and it became effective immediately. He began selling shares on January 15, 2021, and completed his final transactions by February 8, 2021. Shortly after these sales, Emergent’s stock price began a steady decline, which it has not recovered since. In April 2021, the U.S. Food and Drug Administration ordered a permanent halt to the company’s production of the AstraZeneca vaccine.
As the lawsuit unfolds, it raises significant questions about corporate governance and ethical standards within the biotechnology sector. Kramer’s actions, if proven, not only highlight potential violations of insider trading laws but also the broader implications for trust in pharmaceutical companies during a global health crisis.
