The Securities and Exchange Commission (SEC) is currently probing the circumstances around an announcement by Eastman Kodak of a $765 million government loan to produce drugs at factories in the United States.
The Wall Street Journal published early on the probe which does not yield claims of fraud, but it reflects on how Kodak managed the release of the loan. The stock price jumped temporarily, creating a windfall for several chief executives who held awards for stock options.
The loan ensures that Kodak Pharmaceuticals will render vital pharmaceutical ingredients which the Food and Drug Administration has defined as important but which have fallen into chronic national scarcity. The government grant would help cover start-up expenses needed to repurpose and improve current Kodak facilities in Rochester, N.Y., and St. Paul, Minn.
The Journal has previously confirmed that Kodak has exchanged details regarding a contract between the firm and the Trump administration with media outlets. This was released by several sources before being withdrawn.
TV stations in Rochester reported reports after Kodak sent media companies an advisory that did not prohibit outlets from disseminating the story, the outlet said. The amount of trade then grew and the market values increasing.
A spokesperson for Kodak told the outlet that the corporate relations department of the firm “did not plan to get the news reported by the source in question” and that the company subsequently requested reporters to delete the details.
The probe announced came a day after Sen. Elizabeth Warren, D-Mass., urged the SEC to review the circumstances around the contract.
“There were several instances of unusual trading activity prior to the announcement of this deal, raising questions about whether one or more individuals may have engaged in insider trading or in the unauthorized disclosure of material, nonpublic information regarding the forthcoming loan awarded under the Defense Production Act,” she wrote.
She called it “just the latest example of unusual trading activity involving a major Trump administration decision.”
