Warren Calls on SEC to Investigate Potential Insider Trading by CEO of Emergent BioSolutions, Company That Ruined 15 Million Doses of Johnson & Johnson COVID Vaccine
CEO Sold $10 Million in Stock Prior to Disclosure of Manufacturing Failures
"Mr. Kramer's actions appear to be an egregious example of pandemic profiteering.."
Washington, D.C. - Today, United States Senator Elizabeth Warren (D-Mass.) sent a letter to Gary Gensler, Chair of the Securities and Exchange Commission (SEC) urging the agency to investigate Mr. Robert G. Kramer, president and CEO of Emergent BioSolutions (Emergent) - a biopharmaceutical company and contract manufacturer for the Johnson & Johnson vaccine. A new report based on SEC filings suggests that Mr. Kramer dumped $10 million of Emergent stock prior to disclosure of significant production problems at his company's Maryland facility - just before his company ruined millions of Johnson & Johnson vaccine doses.
Senator Warren has been concerned about pandemic profiteering since the beginning of the public health crisis. In her letter, she urges the SEC to use the tools at their disposal to act quickly and aggressively to investigate these new reports of insider trading. "Mr. Kramer's actions appear to be an egregious example of pandemic profiteering: he personally profited from millions of dollars of taxpayer-funded contracts while the company he led caused critical delays in the COVID-19 response - and he then protected his personal profits by selling his stock at inflated prices before the company disclosed its failures," wrote Senator Warren.
In March 2021, millions of doses of Johnson & Johnson vaccines to protect against COVID-19 were ruined due to an accidental cross-contamination during its production process at a plant operated by Emergent BioSolutions. This error significantly delayed the nation's production of COVID-19 vaccines. It also caused Emergent's stock value to decline by nearly 50%.
A new report indicates that Emergent's CEO and President, Mr. Robert G. Kramer dumped $10 million in stocks in January and February and appears to have made approximately $7.5 million in profits on the stock sales. According to the report, "Kramer's sales were made as part of a trading plan that he adopted on Nov. 13 ... which establish(ed) in advance when stocks are to be bought and sold." But Senator Warren wrote to the SEC earlier this year warning that "new evidence indicates that executives - especially those in the healthcare industry - are abusing these plans to obtain huge windfalls at the expense of ordinary investors."
A series of recent reports have indicated that Mr. Kramer had ample knowledge of production problems at the company dating to early 2020, none of which were publicly disclosed until recently.
Federal law bars individuals from ''purchasing or selling a security while in possession of material nonpublic information" - in this case, the CEO's knowledge that Emergent was plagued by production problems. Violation of these laws may subject individuals to civil penalties "three times the amount of the profit gained or loss avoided" and criminal penalties up to $5,000,000 and 20 years imprisonment."
Senator Warren concluded: "The SEC has a responsibility to protect shareholders, investors, and the public. Given my longstanding concerns about pandemic profiteering and the specific troubling new details about Emergent and Mr. Kramer's sales of company stock amidst its vaccine production failures, I ask that the SEC open an investigation of this matter as rapidly as possible."
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