Kaplan Fox Files Class Action To Recover Losses For Investors Who Purchased Or Sold Eastman Kodak Company Securities And Were Damaged Thereby
NEW YORK, Aug. 26, 2020 /PRNewswire/ -- Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) has filed a class action suit in the United States District Court for the Southern District of New York against Eastman Kodak Company ("Kodak" or the "Company") (NYSE: KODK) and James V. Continenza ("Continenza"), Executive Chairman of Kodak ("Defendants").
The Complaint alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission, and is brought by plaintiffs on behalf of all persons and entities who purchased or sold the publicly traded securities of Kodak from July 27, 2020 through August 11, 2020, inclusive (the "Class Period"), and were damaged thereby.
If you are a member of the proposed Class, you may move the court no later than October 13, 2020 to serve as a lead plaintiff for the proposed Class. You need not seek to become a lead plaintiff in order to share in any possible recovery.
The complaint alleges that on July 27, 2020 according to The Wall Street Journal, Kodak released information to local reporters in Rochester, New York with no embargo time on the news advisory regarding a new manufacturing initiative that "could change the course of history for Rochester and the American people." On July 27, 2020, Kodak's shares increased in price by nearly 25% on unusually heavy trading volume of over 1.645 million shares to close at $2.62 per share.
The complaint also alleges that on July 27, 2020, unknown to investors, Kodak granted its Executive Chairman and CEO, Defendant Continenza, 1.75 million stock options at a conversion price of between $3.03 and $12 per share.
Then, on July 28, 2020, before the market opened, the Company announced that it was selected to receive a $765 million transformative loan from the U.S. International Development Finance Corporation ("DFC") under the Defense Production Act to produce pharmaceutical materials, including ingredients for COVID-19 drugs (the "$765 million DFC Loan" or "Loan"). Among other things, the Company announced that "Kodak is expanding its traditional product line to support the national response to COVID-19 by bolstering domestic production and supply chains of key strategic resources" and "DFC's loan will accelerate Kodak's time to market by supporting startup costs needed to repurpose and expand the company's existing facilities in Rochester, New York and St. Paul, Minnesota, including by incorporating continuous manufacturing and advanced technology capabilities." These statements and others made by the Defendants represented to investors that the $765 million Loan from the government was a done deal.
In reaction to the July 28, 2020 news that Kodak was forming a new business unit to produce essential pharmaceutical components funded by the $765 million DFC loan, Kodak's shares soared, reaching an intra-day high of $11.80 per share, 350% greater than the closing price the prior trading day, and closed at $7.94 per share on unusually heavy trading volume of over 284 million shares, about 203% higher than the closing price of $2.62 per share on July 27, 2020.
Then, on July 29, 2020 before the market opened, Defendant Continenza was interviewed on CNBC's Squawk Box during which he touted the loan and the Company's shift to producing the ingredients for COVID-19 drugs. Among other things, Defendant Continenza stated that he was "very comfortable that we can bank on [the loan]," that Kodak's new business unit based on the $765 million DFC Loan would be profitable, that the Loan had been a "tight-kept secret" up until July 28, 2020, and that he had no explanation for the surge in trading volume from about 74,000 on Friday, July 24, 2020 to more than 1.64 million on Monday, July 27, 2020.
In reaction to Defendant Continenza's July 29, 2020 statements touting the Loan and the fact that investors can "bank on it," Kodak's shares skyrocketed further, reaching an intra-day high of $60 per share on July 29, 2020 on unusually heavy trading volume of over 276 million shares, and closed up $25.26 per share at $33.20 per share, 318% greater than the closing price of $7.94 per share on July 28, 2020.
The complaint alleges that the Defendants' statements throughout the Class Period were materially false and/or misleading, and failed to disclose that (1) prior to the formal announcement of the Loan and during what should have been a black-out period for insider stock activity, Defendant Continenza was granted 1.75 million options and other insiders were engaging in suspiciously-timed transactions based on material non-public information, (2) the Defendants had improperly leaked the information to the market on July 27, 2020 before the official announcement and actively engaged in a cover-up scheme, (3) the status and likelihood of the $765 million DFC Loan was misrepresented to the market for many reasons, particularly given the Company's wrongful behavior in terms of secretly granting options to Defendant Continenza and other insider transactions while in possession of material non-public information, as well as improperly leaking the news and engaging in a cover up scheme of these facts, and (4) as a result of the foregoing, Defendants' statements about Kodak's business, operations, and prospects, were materially false and/or misleading and/or lacked a reasonable basis.
According to the complaint, the truth came to light through a series of partial revelations starting with the publication of an article by The Wall Street Journal after the market closed on July 29, 2020 reporting that Kodak had leaked news of the $765 million DFC Loan to certain media outlets on July 27, 2020, after which the Company sought to cover up its mistake by secretly attempting to retract those stories. Following the after-market July 29 news, Kodak's stock price declined more than 10% during trading on July 30, 2020 and then declined by approximately 27% on July 31, 2020 to close at $21.85 per share.
Further, the complaint alleges that following reports over the weekend of August 1-2, 2020, that Defendant Continenza had secretly been granted 1.75 million options on July 27, 2020, just prior to the announcement of the loan, Kodak's stock price fell 31.6% to close at $14.94 per share on August 3, 2020.
Further, following reports on August 4, 2020, that Senator Elizabeth Warren had asked U.S. regulators to examine alleged insider trading and disclosure violations prior to Kodak's July 28, 2020 announcement of the $765 million DFC Loan, as well as other news that the SEC had already started investigating Kodak, Kodak's shares fell $0.54 per share, about 3.6%, to close at $14.40 per share on August 4, 2020.
Further, on August 7, 2020, before the market opened, Kodak announced that its Board had opened an internal review of the disclosure of the $765 million DFC Loan, after which Kodak's shares fell 7.6% to close at $14.88 per share on August 7, 2020.
The complaint also alleges that on August 7, 2020, after the market closed, the DFC issued a tweet indicating that the $765 million Loan to Kodak had been put on hold in light of the allegations of wrongdoing. On August 10, 2020, the first trading day following the news, Kodak's shares fell by $4.15 per share, nearly 28%, to close at $10.73 per share. Kodak's shares continued to decline the next trading day, falling by 6.7% to close at $10.01 per share on August 11, 2020.
Finally, the complaint alleges that on August 11, 2020, after the market closed, in connection with the Company's release of its financial results for the second quarter, Kodak held a conference call during which Defendant Continenza repeatedly referred to the Loan as a "potential loan", in stark contrast to his statements on July 29, 2020 that the Loan was effectively a done deal. Following this news, Kodak's shares declined farther by an additional 2.9% to close at $9.72 per share on August 12, 2020.
Plaintiffs seek to recover damages on behalf of the proposed Class and are represented by Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com). Our firm, with offices in New York, Oakland, Los Angeles, Chicago, and New Jersey, has decades of experience in prosecuting investor class actions and actions involving violations of the Federal securities laws.
If you have any questions about this Notice, the action, your rights, or your interests, or would like a copy of the complaint, please e-mail [email protected] or call (646) 315-9003, or contact the attorneys below:
Frederic S. Fox
KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
(646) 315-9003
E-mail: [email protected]
Donald R. Hall
KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
(646) 315-9003
E-mail: [email protected]
SOURCE Kaplan Fox & Kilsheimer LLP
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