ROCHESTER, N.Y. (WROC) — Eastman Kodak Co. officials say the New York State Attorney General’s office has threatened to file an insider trading lawsuit against the company and its CEO Jim Continenza.
The claim stems from a June 2020 stock purchase by Continenza that the company says was legally sound. According to a May 17, 2021 From 10-Q filing by the company with the United States Securities and Exchange Commission:
“The Attorney General of the State of New York has threatened to file a lawsuit against the Company and its Chief Executive Officer alleging violations of New York State’s Martin Act in connection with the Chief Executive Officer’s purchase of 46,737 shares of the Company’s common stock on June 23, 2020 (the ‘Threatened Claim’). This purchase was made by the Chief Executive Officer during an ‘open window’ period and in compliance with the Company’s insider trading policy, including pre-approval by its general counsel. The Chief Executive Officer has never sold any Kodak shares. The Company considers the Threatened Claim to be unsupported by law or fact and intends to vigorously defend itself against the Threatened Claim should it be filed.“
Officials from the New York State Attorney General’s office declined to comment Monday when News 8 inquired about the claims made by Kodak.
The June 23, 2020 stock purchase is the focus of the claim, as it came one month before the Trump administration announced a $765 million federal loan to help transform the former film powerhouse into a modern pharmaceutical manufacturer.
Dr. Peter Navarro, assistant to former President Donald Trump, and former Director of the Office of Trade and Manufacturing Policy at the White House, came to Rochester for the announcement and said the loan deal was a transformational economic opportunity.
“This is going to be one of the greatest second acts in American industrial history,” Navarro said last summer.
News of the loan sent Kodak’s stock soaring, and then tumbling, but it still sustained significant gains from its earlier price for most of 2020 up until that point. The June stock purchase by Continenza was then investigated by multiple government agencies.
In December 2020, a government watchdog agency said it found no wrongdoings in the stock purchasing process. The report stated that the investigator general of the U.S. International Development Finance Corporation didn’t find evidence of conflicts in the plan or any misconduct from DFC officials.
Before the watchdog report, the inspector general of the agency that brokered the deal provided his assessment to Sen. Elizabeth Warren, who had called for the investigation after Kodak landed a potential $765 million government loan in July.
Warren’s said analysis showed an unusual trading pattern in Kodak stock that began prior to the public announcement of the deal.
“The day before the public announcement, trading volume in Kodak stock was almost eight times higher than the daily average and the company’s stock rose approximately 20%. On the day the deal was officially announced, the stock rose by over 200% – and the day after it rose by more than 300%. Individuals who purchased the stock prior to the announcement earned an extraordinary return,” Warren’s said.
Before the watchdog agency’s report, Kodak conducted an internal review of the activity by the company’s CEO and found no wrongdoing as well.
Check back with News 8 WROC as we will continue to update this developing story.