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On January 15, 2026, Letitia James, the New York attorney general (NY Attorney General), filed a complaint against Robert Kramer, the former CEO of Emergent BioSolutions Inc., alleging insider trading in violation of the state's Martin Act.
The NY Attorney General charges that Mr. Kramer instituted an SEC Rule 10b5-1 plan providing for the sale of Emergent stock when he knew of material nonpublic information about "serious and unresolved" contamination issues Emergent faced in its manufacturing of the drug substance contained in COVID-19 vaccines.1 The action follows Emergent's $900,000 settlement with the NY Attorney General over its approval of Mr. Kramer's 10b5-1 plan.
The complaint against Mr. Kramer signals a potential shift in securities enforcement, in which state law enforcement officers may be increasingly willing to prosecute what would traditionally have been considered federal offenses using available parallel state laws.
In an interesting turn of events, on February 5, Mr. Kramer filed a notice to remove the NY Attorney General's complaint to federal court. In that notice, Mr. Kramer contends that removal is proper because the NY Attorney General's claims arise under federal law; that during the period in question, he was effectively a federal officer; and that because the NY Attorney General sues on behalf of New York investors, diversity jurisdiction exists.
Timeline of events
In 2020, Emergent entered into two contracts with AstraZeneca to manufacture COVID-19 vaccines. After announcing this partnership, Emergent's stock price almost doubled over the course of three months. But by October, Emergent allegedly found evidence of cross contamination in its manufacturing process for the vaccines.
The NY Attorney General claims that even as Mr. Kramer learned about the contamination problem, he initiated a Rule 10b5-1 trading plan on November 13, 2020, to sell Emergent stock. At the time, Mr. Kramer held more than 200,000 Emergent stock options. The trading plan included a 60-day "cooling-off" period, after which the options would be exercised and the stock sold, assuming certain price targets were achieved.2 Emergent's in-house counsel reviewed the plan and approved its execution.
Mr. Kramer ultimately sold more than 88,000 shares of Emergent stock from mid-January through early February and allegedly realized proceeds of $10.1 million before news of the contamination became public. The contamination purportedly prevented Emergent from meeting its production deadlines, and the company's value plummeted.
Rule 10b5-1 plans and New York's Martin Act
Rule 10b5-1 provides a safe harbor allowing insiders to create a predetermined trading plan for transactions in company stock without engaging in insider trading. As noted, Mr. Kramer's 10b5-1 plan provided that it would not take effect for 60 days. Such a cooling-off period was not required by SEC rules at the time of his trades. But in 2022, the SEC amended Rule 10b5-1 to require 10b5-1 plans to include a cooling-off period consisting of the longer of (1) 90 days following the adoption or modification of the trading plan or (2) two business days following the filing of the Form 10Q or 10-K for the fiscal year in which the plan was adopted or modified. The amendment also requires insiders to complete a certification stating that they were not aware of any material nonpublic information on the date of adoption of the 10b5-1 plan.
To prevail on a claim that an individual violated Rule 10b-5 when setting up and executing a 10b5-1 plan, the SEC would need to demonstrate "scienter," or that the defendant acted with the "intent to deceive, manipulate, or defraud."3
In Kramer, however, the NY Attorney General contends that Mr. Kramer's 10b5-1 plan and the resulting sales violate the Martin Act. While the Martin Act prohibits "fraudulent practices," under relevant case law, the NY Attorney General is arguably not required to prove scienter, or specific intent to deceive.4 The Martin Act may, therefore, reach a broader scope of conduct than SEC Rule 10b-5 or common-law fraud.
NY Attorney General returning to early 2000s playbook
The complaint against Mr. Kramer is the latest sign of the NY Attorney General's willingness to act in an enforcement area traditionally left to federal agencies, like the SEC. Both the SEC and the Department of Justice have previously brought actions charging insider trading in connection with allegedly improper 10b5-1 plans. Indeed, just last year, the Department of Justice secured a 42-month prison sentence against the former CEO of Ontrak for allegedly using a Rule 10b5-1 stock trading plan to engage in an insider trading scheme.5
But here, in a public statement, Mr. Kramer's counsel indicated that both the SEC and the Department of Justice had declined to prosecute Mr. Kramer.6 In the notice of removal, Mr. Kramer contends, in part, that the complaint requires federal court review because the NY Attorney General's claims arose under federal law and implicated the "scope and application of a federal regulation governing insider trading compliance."7
This is, of course, not the first time the New York Attorney General's Office has been a dominant and aggressive enforcer of securities law. Practitioners will recall the office's investigation of market timing and late trading practices in the early 2000s. Then, under the leadership of Eliot Spitzer, the office used the Martin Act against mutual fund companies, leading to settlements involving 10 banks and more than $1 billion in fines in such matters.8
Emergent reached $900,000 settlement with NY Attorney General over approval of Rule 10b5-1 plan
The NY Attorney General's complaint against Mr. Kramer arrives after the NY Attorney General reached a $900,000 settlement with Emergent on January 9 for its role in reviewing and approving Mr. Kramer's 10b5-1 plan.
As part of the settlement, the company agreed to amend its Insider Trading Policy, which, among other things, now requires senior officials to certify that they do not possess material nonpublic information. In that connection, they also certify whether they are aware of any nonpublic "material incident."9 The settlement broadly defines material incident to include "significant development[s] in the Company's relationships with key regulators," knowledge of "whistleblower or ethics complaints and the results of any investigations into such complaints," and "material and notable production issues."10 The materiality of a specific incident frequently requires an analysis of the relevant facts and circumstances. Suffice to say the materiality of the listed examples may not always be apparent on their face. In fact, in his motion to remove, Mr. Kramer argues that the materiality analysis concerning early-stage development issues is more complicated than the NY Attorney General suggests and that the complaint "rests on a misguided assumption that developmental challenges in early-stage work on a 'moonshot' initiative constitute material information."11
With the litigation against Mr. Kramer in its initial stages, the NY Attorney General's complaint is an alert to public companies, and their senior management, to pay greater attention to state laws regulating securities trading. The possibility of increased insider trading enforcement by state attorneys general poses increased risks for insiders, their directors and their officers. Such state regulators may not have the expertise and familiarity with such rules and the concepts underlying them that federal regulators have, raising concerns as to inconsistent and improper retroactive assessments. If other states follow New York's lead, public companies will need to take into account an increasingly complicated and varying landscape of state enforcement regulating securities trading.
Footnotes
1 Complaint, People v. Kramer, No. 1:26-cv-00991 (Sup. Ct. N.Y. Cnty. Jan. 15, 2026), at ¶1, https://ag.ny.gov/sites/default/files/court-filings/new-york-v-robert-g-kramer-complaint-2026.pdf (the Complaint).
2 Id. at ¶56; see also SEC Adopts New Conditions and Disclosures Regarding 10b5-1 Plans, HSF Kramer, 1 (Dec. 19, 2022) (describing SEC amendments to Rule 10b5-1 plans that require mandatory 90-day cooling-off period), https://www.hsfkramer.com/insights/2022-12/sec-adopts-new-conditions-and-disclosures-regarding-10b5-1-plans.
3 Aaron v. SEC, 446 U.S. 680, 686 (1980) (holding that scienter is an element of Sec. 10(b) and Rule 10b-5 violations).
4 See People v. Credit Suisse Sec. (USA) LLC, 31 N.Y.3d 622, 632 (N.Y. Ct. App. 2018) ("[T]he Attorney General need not prove scienter or intentional fraud in a Martin Act enforcement proceeding."); Anwar v. Fairfield Greenwich Ltd., 728 F.Supp.2d 354, 357 (S.D.N.Y. 2010) (recognizing that "proof of deceitful intent" is not an element required by the Martin Act).
5 Former Chairman and CEO of Publicly Traded Health Care Company Sentenced to 42 Months in Prison for Insider Trading, Dept. of Justice (June 23, 2025), https://www.justice.gov/opa/pr/former-chairman-and-ceo-publicly-traded-health-care-company-sentenced-42-months-prison, but see Will Weissert, Trump issues a flurry of pardons, including for a woman whose sentence he commuted in his first term, Associated Press (Jan. 16, 2026), https://apnews.com/article/trump-pardons-donor-twice-convicted-fraud-99263a04b8a60ce8c081b9c5feaffd2e (reporting President Trump's decision to pardon former CEO of Ontrak).
6 Beth Wang, NY Sues Ex-Emergent BioSolutions CEO for Insider Trading, Bloomberg Law (Jan. 15, 2026), https://news.bloomberglaw.com/litigation/ny-sues-ex-emergent-biosolutions-ceo-kramer-for-insider-trading.
7 Notice of Removal at 2, People v. Kramer, No. 1:26-cv-00991 (S.D.N.Y. Feb. 4, 2026).
8 Michael J. De La Merced, In JPMorgan Case, the Martin Act Rides Again, N.Y. Times (Oct. 2, 2012), https://archive.nytimes.com/dealbook.nytimes.com/2012/10/02/in-jpmorgan-case-the-martin-act-rides-again.
9 Assurance of Discontinuance, In re Emergent BioSolutions, Inc., Assurance No. 26-001, 38b (Jan. 15, 2026), https://ag.ny.gov/sites/default/files/settlements-agreements/emergent-biosolutions-inc-assurance-of-discontinuance-2026.pdf.
10 Id. at 15(i), (ii), (iii).
11 Id. at 5.
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