Eastman Kodak Company (KODK) Investigation:
The investigation centers on whether Kodak's board of directors breached its fiduciary duties related to the disclosure of the company obtaining a $765 million U.S. government loan.
Specifically, on July 27, 2020 news leaked that Kodak had received a letter of intent for a $765 million government loan under the Defense Production Act to help expedite domestic production of drugs that can help treat a variety of medical conditions and loosen U.S. reliance on foreign sources. This news, which emerged one day before the company was scheduled to publicly announce the loan, caused Kodak's shares to skyrocket on heavy volume.
But on July 29, 2020, The Wall Street Journal reported that Kodak itself had sent a news advisory about the $765 million loan to media outlets in Kodak's hometown of Rochester, New York, without indicating the information was not intended to be released publicly. This caused local reporters to publish favorable stories and tweets about the loan, which were subsequently deleted.
That same day, it was also reported that on July 27, 2020, Kodak's board of directors granted several insiders options to purchase approximately 1.885 million shares of the company's common shares. These insiders include Executive Chairman and CEO James V. Continenza, who received options to purchase 1.75 million shares, and CFO David E. Bullwinkle, who received options to purchase 45 thousand shares.
Since this time, it has been reported that the SEC is investigating Kodak's controlled disclosure of the loan and whether any illicit trading occurred before the loan announcement. Moreover, on Aug. 9, 2020, the U.S. International Development Finance Corp. announced that it has put the loan on hold pending probes of alleged wrongdoing.
"We're examining whether Kodak's Board breached their duty of loyalty in publicly disclosing the loan and granting insiders rich stock options," said Reed Kathrein, the Hagens Berman partner leading the investigation.
If you are a Kodak shareholder, click here to discuss your legal rights with Hagens Berman.
Whistleblowers: Persons with non-public information regarding Kodak should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].
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Reed Kathrein, 844-916-0895
SOURCE Hagens Berman Sobol Shapiro LLP