Kodak involved in SEC investigations of insider trading and breach of policy


The US Securities and Exchange Commission (SEC) is looking into Eastman Kodak Co.’s handling of information regarding a massive federal drug loan of $765 million and possible insider trading of shares prior to its announcement.

The SEC is investigating allegations of wrongdoing, and whether or not Kodak violated disclosure requirements for publicly traded companies.

The agency is also investigating allegations of insider trading before the official loan announcement.

It is believed Kodak shared information on its deal with media outlets based in Rochester New York where it is headquartered. The news was later deleted on the company’s request. Generally, companies accompany such news with an embargo time and any breach can lead to repercussions.

A report by Reuters claimed that a day before the announcement, Kodak “granted its executive chairman options for 1.75 million shares as the result of what a person familiar with the arrangement described as an ‘understanding’ with its board that had previously neither been listed in his employment contract nor made public.”

Kodak Investigation Regulatory SEC

– Kodan HQ

Furthermore, new reports allege that Kodak CEO James Continenza purchased more than 46,000 shares days before the announcement. His profit from the purchase hit $1.6 million, the report said.

News of the loan caused Kodak shares to rise as high as $60, before falling to about $15 on Monday due to a dilution in the shares. Continenza, however, claimed he was unaware of any leaks in advance of the official announcement.

“I mean obviously this has been a pretty tight kept secret even until the last day,” Continenza told media.

A spokesperson for Kodak said that Continenza “has regularly purchased Kodak shares with his own money since joining the Company in 2013 … because he strongly believes in the long-term success of the Company.”

“In fact, Mr. Continenza has invested more capital in Kodak than he has earned during his tenure. Mr. Continenza has purchased shares at nearly every available window in which he is eligible since he joined the Company,” the spokesperson added. “He has not sold a single share of stock during his time at Kodak.”

Continenza emphasized that the loan announcement was in the works for about two months. He and Phillippe Katz, a board member and owner of several investment firms that hold Kodak shares, made purchases of Kodak shares during that time period, securities disclosures show.

The purchases were similar though smaller than earlier buyings, securities disclosures show.

The SEC investigation comes a day after Sen. Elizabeth Warren called the agency to look into “potential incidents of insider trading” related to the company’s deal with the government.

The Trump administration on its part has distanced itself from the Kodak deal, though an investigation has been promised to see what was involved.

SEC rules require public companies to adhere to all the norms and regulations to ensure accurate and timely disclosure of material events. Kodak, on the other hand defends itself by saying that the loan details aren’t finalized and that there is no guarantee one will be made.

The post Kodak involved in SEC investigations of insider trading and breach of policy appeared first on Industry Leaders Magazine.


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