Judge Dismisses Investors’ Lawsuit Against Kodak and CEO Involving COVID-19 Related Loan
You may recall back in the summer of 2020 what seemed like a very attractive opportunity for Eastman Kodak: produce much-needed pharmaceutical drugs in short supply because of supply-chain disruptions caused by the COVID-19 pandemic. To help Kodak in this mission, the U.S. government pledged a $765 million loan.
Unfortunately, things went bad quickly, Kodak never received the loan or began drug manufacturing. To make matters worse, the company’s CEO and executives were accused of insider trading – of purchasing large volumes of Kodak stock before the loan announcement was made, causing the stock to skyrocket. In particular, Kodak CEO James Continenza was accused of purchasing 46,000 Kodak shares during Kodak’s negotiations with the government concerning the loan.
Now, however, according to Bloomberg Law, a U.S. District Court judge has exonerated the company, dismissing a securities lawsuit brought by investors who accused the company, its CEO, and other executives of misleading them about the loan.
Judge Elizabeth Wolford in the U.S. District Court for the Western District of New York ruled this week that neither Kodak nor its executives made misstatements or material omissions in connection with the loan. Kodak’s shares had plunged when the loan was withdrawn in August 2020 following reports of possible insider trading, ruling that there was no wrongdoing.
Meanwhile, previously the U.S. International Development Corporation (DFC), the agency that was originally proposing the loan, has since ruled that there was no misconduct.
In December 2020, the U.S. Securities and Exchange Commission also cleared the company and executives of wrongdoing.
New York Lawsuit
Despite the good news for Kodak and its executives, it may not be off the hook, as there remains an ongoing lawsuit. In June 2021, New York Attorney General Letitia James filed an ongoing lawsuit against Kodak and CEO Continenza alleging insider trading and wrongdoing.
At the time, James had said, “… Kodak’s CEO was using insider information to illegally trade company stock. Kodak even double downed on this fraud by relaying false information about this trade to investors just before the company’s annual meeting last month.”
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