New York State Attorney General Letitia James inked a settlement with Emergent under which the company will pay $900,000 in penalties.
- The Attorney General’s lawsuit alleges that Kramer knew about the manufacturing and contamination issues and yet executed a trading plan before those issues were made public in violation of the law.
- James is now seeking damages, disgorgement, and costs from Kramer.
- Emergent inked contracts worth $261 million with AstraZeneca in 2020 to manufacture the latter’s Covid-19 vaccine.
Shares of Emergent Biosolutions Inc (EBS) slumped 13% on Thursday after New York State Attorney General Letitia James sued the company’s former CEO Robert G. Kramer for insider trading.
James also inked a settlement with Emergent under which the company will pay $900,000 in penalties for approving Kramer’s trading plan. Emergent will improve its executive trading policies, James said.
Transactions In Question
Emergent inked contracts worth $261 million with AstraZeneca in 2020 to manufacture the latter’s Covid-19 vaccine. However, large amounts of the vaccines Emergent produced were contaminated, rendering them unusable.
According to a probe by the Office of the Attorney General, Kramer was made aware of the contamination in October 2020 and the company omitted the unresolved contamination issues in communications through November. It instead approved Kramer’s trading plan under which he sold his company shares for over $10 billion, James said, while adding that Emergent's shares began to drop shortly after Kramer completed his sales in February 2021.
The U.S. Food and Drug Administration (FDA) ordered a permanent halt to Emergent’s production of the AstraZeneca (AZN) vaccine in April 2021. The Attorney General’s lawsuit alleges that Kramer knew about the manufacturing and contamination issues and executed a trading plan before those issues were made public in violation of the law. James is now seeking damages, disgorgement, and costs from Kramer.
“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.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment around EBS rose from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours, while message volume increased from ‘high’ to ‘extremely high’ levels.
A Stocktwits user dismissed the penalty amount as irrelevant to the company’s financials.
Another termed the sell-off an “easy buying opportunity.”
EBS stock has gained 15% over the past 12 months.
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