Former Emergent BioSolutions CEO Robert G. Kramer is facing a lawsuit for insider trading, filed by New York Attorney General Letitia James. The legal action comes after Kramer allegedly sold company shares worth over $10 million, armed with the knowledge of critical manufacturing issues at Emergent's facility that produced contaminated COVID-19 vaccine doses – information that was not yet public. According to a statement obtained by the New York Attorney General's Office, this move was in violation of the state's Martin Act, a regulation designed to curb illegal trading activity by individuals privy to material non-public information.
In 2020, after securing lucrative contracts with AstraZeneca amounting to $261 million for vaccine production, Emergent's valuation spiked significantly. Despite the uptick in share prices, Kramer was allegedly briefed about problems with the vaccine batches – issues that could potentially derail the company's high-stakes manufacturing deal. Kramer, while sitting on this sensitive insider information, conducted stock transactions that would later net him millions. In the wake of this activity, Emergent has agreed to a settlement where they must cough up $900,000 and commit to revamping their executive trading policies. Meanwhile, Attorney General James, notorious for his tenacity in the areas of financial non-compliance, is seeking financial restitution, which includes damages, disgorgement of profits, and the associated costs from Kramer, "who use insider information to illegally trade company stocks and make a profit betray the public’s trust," as he expressed in the recent reports by the Attorney General's Office.
Emergent BioSolutions saw its stocks plummet subsequent to Kramer finalizing his controversial stock sales when, in April of 2021, the FDA halted the company's production of the AstraZeneca vaccine due to the unresolved contamination issue. The OAG's investigation revealed that an executive vice president, responsible for the manufacturing operations, presented Kramer a document detailing contaminated vaccine batches a week prior to Kramer initiating his predetermined trading scheme. These trading arrangements are often used by executives under the SEC Rule 10b5-1 for scheduled stock trading but are illegal when utilized to circumvent insider trading laws.
The case against Kramer is spearheaded by Assistant Attorney General T. Austin Brown of the Investor Protection Bureau and Special Counsel Steven J. Glassman of the Economic Justice Division. According to the NY AG's press release, the team is not only relying on the Martin Act’s strict stance against insider trading but is also backed by Staff from the Investor Protection Bureau including Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim.
