Eastman Kodak says New York preparing insider-trading lawsuit

Eastman Kodak

17/05/2021 21:22

By Mike Spector
    NEW YORK, May 17 (Reuters) - The New York attorney general’s
office is preparing an insider-trading lawsuit against Eastman
Kodak Co  KODK.N  and its top executive, focusing on stock
purchases that preceded an ill-fated deal with the Trump
administration to finance a pharmaceutical venture during the
COVID-19 pandemic, according to the company and people familiar
with the matter.
    The emerging civil case centers on Executive Chairman Jim
Continenza’s June 23, 2020, purchase of nearly 47,000 Kodak
shares, Kodak said in a quarterly Securities and Exchange
Commission filing on Monday. Continenza, the company chairman
starting in September 2013 and executive chairman since February
2019, took on the additional role of CEO in July 2020.
    The trades occurred weeks before the Trump administration
unveiled a tentative agreement to lend the company $765 million
backing production of pharmaceutical components for help
fighting the pandemic. Kodak’s stock experienced a roller
coaster following the late-July announcement, skyrocketing more
than 1,000% before falling.
    New York Attorney General Letitia James’s office did not
immediately respond to a request for comment.
    The investigators are seizing on Continenza’s alleged
knowledge of material nonpublic information surrounding
negotiations for the government loan when he purchased Kodak
shares, according to the company and people familiar with the
matter.
    In a statement provided to Reuters, Kodak said Continenza
did not possess material nonpublic information when he purchased
his shares and "did not engage in insider trading." Kodak
declined to make Continenza available for comment.
    Kodak pointed to an investigation conducted by its outside
law firm, which found Continenza’s purchases were approved by
the company's general counsel. The purchases, made at a weighted
average price of $2.22 per share, were in compliance with
Kodak’s insider-trading policies and did not violate securities
regulations or other relevant laws, the review found.
    Continenza has also regularly purchased stock during
internally approved time windows, which included the June 2020
trades, and has never sold his shares, the company said.

 (Reporting by Mike Spector; editing by Vanessa O'Connell and
Edward Tobin)
 ((mike.spector@thomsonreuters.com;))