New York Sues Ex-CEO of Covid Vaccine Firm for Insider Trading
New York Attorney General Letitia James has filed an insider trading lawsuit against Robert G. Kramer, the former CEO of Emergent BioSolutions. The lawsuit, submitted on a Thursday in New York State court, accuses Kramer of profiting from insider knowledge about contaminated Covid-19 vaccine doses.
Details of the Lawsuit
Kramer allegedly made a profit of $7.6 million by exercising stock options before the public was informed of issues with vaccine production for AstraZeneca. The lawsuit states that Kramer was aware of systemic contamination problems related to the company’s involvement in Operation Warp Speed, a federal initiative aimed at expediting vaccine development.
Stock Price Decline and Settlements
Emergent BioSolutions faced a significant decline in its stock price, which dropped from a high of $134.46 per share in August 2020 after the vaccine contamination came to light. The company ultimately had to discard contaminated doses, leading to production suspension.
- Stock Sale Timeline:
- November 2020: Company approved a stock sale plan.
- January-February 2021: Kramer sold shares, generating $7.6 million.
As a part of the settlement, Emergent BioSolutions will pay New York State $900,000. Additionally, the company has committed to enhancing its insider trading policy and will report trading activity from senior management and board members for three years.
Emergent BioSolutions’ Role in the Pandemic
Emergent was designated as a critical entity in the U.S. pandemic response. In June 2020, it secured a $628 million contract to manufacture vaccines for both Johnson & Johnson and AstraZeneca. However, contamination issues became apparent, resulting in the disposal of millions of vaccine doses.
Company’s Response
In response to the allegations, Kramer’s attorney, Kirby D. Behre, criticized the lawsuit as unfounded and described Kramer’s actions as compliant with federal regulations. Behre argued that Kramer’s tenure at Emergent was characterized by transparency and cooperation with the U.S. government.
Attorney General James has emphasized that corporate executives who use insider information for financial gain breach public trust. “Kramer’s actions were illegal and unethical,” she stated, asserting the need for accountability.
Future Implications
The lawsuit raises questions about potential criminal charges against Kramer, although the attorney general’s office has not indicated any plans in that direction. Emergent BioSolutions continues to assert its commitment to ethics and compliance in response to the ongoing scrutiny.
As this case unfolds, it sheds light on the critical responsibilities of corporate executives and the importance of upholding integrity in financial practices.
