The former chief executive of a biopharmaceutical company used insider information about contamination in a COVID-19 vaccine to make more than $10 million in trades, the New York Attorney General’s office alleged Thursday in a new lawsuit against the executive, Robert Kramer.
Kramer was the CEO of Emergent BioSolutions, a government contractor hired to mass produce coronavirus vaccine doses, 400 million of which had to be destroyed in 2021 because of contamination at Emergent’s plant in Baltimore.
Before the contamination issues were made public, Kramer sold his company shares and received $10.1 million, according to the attorney general’s lawsuit, which seeks damages, disgorgement and costs.
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“Corporate executives who use insider information to illegally trade company stocks and make a profit betray the public’s trust,” said New York Attorney General Letitia James in a statement announcing the lawsuit. “At the height of the COVID-19 pandemic, Robert Kramer illegally profited millions by selling his company shares, while knowing that Emergent faced issues producing the AstraZeneca vaccine for millions of people. Kramer’s actions were illegal and unethical, and we are holding him accountable.”
James said Emergent agreed to pay $900,000 in penalties for approving Kramer’s trading plan, in violation of New York’s Martin Act, which prohibits insider trading.
“The lawsuit against Mr. Kramer is baseless and an overreach,” his lawyer Kirby Behre said.
In the summer of 2020, Emergent announced two contracts with AstraZeneca worth a combined $261 million to manufacture a large-scale commercial supply of COVID-19 vaccine. After the announcement, Emergent’s stock price rose 43.6% from $94.99 to $136.49. According to the lawsuit, starting in September and early October, Emergent experienced manufacturing difficulties and noticed contamination issues in its production of the vaccine.
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The lawsuit alleged Kramer knew about the problems and began to implement a plan to trade his shares before the problems were made public. The lawsuit states that on Oct. 6, 2020, an executive vice president responsible for manufacturing operations provided Kramer with a copy of a PowerPoint presentation that included slides about aborted, contaminated batches of the vaccine. On Oct. 13, 2020, according to the lawsuit, Emergent concluded that multiple batches of vaccine were likely to be lost due to contamination.
