Emergent BioSolutions Inc. (NYSE:EBS) stock rose in Friday premarket trading.
On Thursday, New York Attorney General Letitia James sued former chief executive Robert G. Kramer over alleged insider trading.
James said Kramer used nonpublic information while setting up sales of Emergent stock.
The state also announced a settlement with Emergent over approval of the trading plan.
Settlement Terms
The company agreed to pay $900,000 in penalties to New York.
Emergent also agreed to strengthen executive stock-trading controls and policies.
In summer 2020, Emergent signed two manufacturing deals with AstraZeneca PLC (NASDAQ:AZN).
The contracts totaled $261 million and focused on large-scale COVID-19 vaccine supply.
After the deal announcements, Emergent stock jumped 43.6%.
Shares moved from $94.99 to $136.49, based on the state's figures.
Manufacturing Trouble
The lawsuit says problems began in September and early October 2020.
Emergent found contamination issues affecting vaccine batches at its production site. Investigators said an executive shared a presentation with Kramer on Oct. 6, 2020.
That deck included information about aborted batches and contamination. Emergent later concluded on Oct. 13, 2020, that contamination could wipe out multiple batches.
The next day, Kramer asked an adviser to start a scheduled stock-sale plan.
Trading Plan Focus
Executives often use Rule 10b5-1 plans for prearranged trades. The state said the rule does not shield trades tied to inside information.
Emergent approved Kramer's plan on Nov. 13, 2020, the lawsuit alleged.
Kramer then sold shares in January and February 2021, under that plan.
The state said he collected more than $10.1 million from the sales.
In April 2021, the FDA ordered a permanent halt to Emergent's AstraZeneca production.
James brought the case under New York's Martin Act.
That law bars insiders from trading while holding material, nonpublic information.
Attorney General Statement
"Corporate executives who use insider information to illegally trade company stocks and make a profit betray the public's trust," said Attorney General James.
"Kramer's actions were illegal and unethical, and we are holding him accountable."
James asked the court for damages, costs, and disgorgement from Kramer.
EBS Price Action: Emergent BioSolutions shares were up 1.55% at $11.12 during premarket trading on Friday, according to Benzinga Pro data.
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