Kodak soars 84% after special committee it hired finds no violations of law related to government loan announcement
- Kodak soared on Wednesday after a special committee it hired found that it did not violate any laws related to its announcement that it received a $765 million loan from the US government.
- The report found that Kodak executives did not violate insider trading laws because throughout the loan process, Kodak general counsel told executives that the government loan application process was "at a highly uncertain stage."
- In a statement, Kodak said it would take actions recommended in the report to strengthen its practices, policies, and procedures.
- Shares of Kodak soared more than 2,000% in July after the camera company announced it won a loan from the government to begin producing pharmaceuticals.
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Eastman Kodak soared as much as 84% on Wednesday after it was determined by a special committee that executive trading and option grants in shares of Kodak just prior to a $765 million government loan announcement in July didn't violate insider trading laws.
Kodak hired the Akim Gump Strauss Hauer & Feld law firm to investigate the matter after it received intense scrutiny from the likes of Senator Elizabeth Warren and others about its handling of announcing that it received a US government loan to be used for the production of pharmaceuticals, one day after it granted stock to its CEO.
In the subsequent two trading days, Kodak stock soared more than 2,000%, turning the CEO's stock grant into a sizable sum.
The special committee said Kodak executives did not violate insider trading laws because throughout the loan process, Kodak general counsel told executives that the government loan application process was "at a highly uncertain stage."
Additionally, the firm found that Kodak's failed to place an embargo on a media release about its signing of the government loan due to a misunderstanding, which led to two local Rochester news outlets to tweet about Kodak's upcoming announcement one day before it was officially announced.
"While this early release of information was not in accordance with best practices, it did not violate Reg FD," the special committee found.
In a statement, Kodak said it would take actions recommended in the report to strengthen its practices, policies, and procedures.
"Kodak is committed to the highest levels of governance and transparency, and it is clear from the review's findings that we need to take action to strengthen our practices, policies, and procedures," Kodak said.
Shares of Kodak soared as much as 84%, to $11.44, on Wednesday.
