Robert Kramer, former CEO of Emergent BioSolutions, allegedly earned more than $10.1 million by executing trades with information related to the company’s manufacturing operations that had yet to be made public.
The New York Attorney General has sued Robert Kramer, former CEO of Emergent BioSolutions, for allegedly engaging in insider trading by selling off stocks before an anticipated dip in the company’s shares.
“Kramer entered into the illegal trades while in possession of material nonpublic information regarding serious and unresolved contamination issues Emergent faced,” the complaint reads. Kramer gained more than $10.1 million in proceeds from these stock trades, the suit alleges. The lawsuit was filed Thursday with the Supreme Court of the State of New York.
At the heart of the lawsuit is a series of partnerships in mid-2020 between Emergent and AstraZeneca, which had an aggregate value of more than $260 million. Under the agreement, Emergent promised to manufacture the pharma’s virus-based COVID-19 vaccine, while also providing other contract development services such as analytical testing and drug substance processing.
Soon after the deals were forged, Emergent ran into “serious manufacturing difficulties,” Thursday’s lawsuit claims, namely the contamination of AstraZeneca’s vaccine. The contract manufacturer encountered “excess bioburden (bacteria) and elevated endotoxin” concentrations in several vaccine batches, which ultimately resulted in “the rejection and destruction of multiple batches.”
Kramer was aware of these issues as early as Oct. 6, 2020, the suit alleges.
Later that same month, the complaint claims, Kramer instructed his investment adviser to put in place a trading plan, which the former CEO executed on Nov. 13, 2020—“still in the midst of an internal investigation of the unresolved contamination and manufacturing problems that had not been disclosed to the public.” Ultimately, Kramer earned more than $10.1 million in proceeds from this trading plan.
Kramer had not engaged in such a trade since 2016, the lawsuit states.
The ex-CEO continued to carry out a handful of similar trades through January and early February 2021, acquiring and then immediately selling Emergent shares. Shortly thereafter, Emergent’s contamination problems became public, sending the company’s share prices on a decline “from which it has not recovered,” according to the lawsuit. Kramer announced his retirement from Emergent in June 2023.
The New York Attorney General is asking the court to direct Kramer to “disgorge all amounts obtained” from the alleged insider trading scheme and to pay all direct and indirect damages related to the incident.
The office has also filed a case against Emergent, but on Thursday announced that it had reached a settlement, with the company agreeing to pay $900,000. Emergent has also promised to bake more protections into its anti-insider trading policies.
