The Kodak resurrection story seems to be taking yet another twist with reports that the Securities and Exchange Commission in the United States is investigating the company over its recent disclosure of a $USD 765 million loan from the government to produce pharmaceutical materials.
Following the news about the government loan, Kodak’s stock skyrocketed in value and that’s not the only thing that got the SEC’s attention. CNBC reports that the stock’s value was up 25% with high trading volume on July 27, the day before the company and the US president announced the loan.
The Wall Street Journal reports that the investigation is in its early stages and is focusing on how the company made public the information about the loan. Interestingly, the company allegedly gave local news outlets in Rochester, New York (where Kodak is headquartered) some official information about the loan ahead of the announcement which led to some of these organizations posting stories about it that were then retracted upon Kodak’s request. Apparently Kodak placed no embargo on the announcements it gave to these local news organizations in Rochester.
A spokesperson for the company told CNBC in an interview with regard to one early leak that, “The company’s internal communications team did not intend for the news to be published by the outlet in question.”
Massachusetts state senator Elizabeth Warren, a seasoned Wall Street watcher, said of the Kodak disclosure, “There were several instances of unusual trading activity prior to the announcement, 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 $765 million loan awarded under the Defense Production Act.”
What do you think of Kodak’s pivot to pharmaceuticals or, more specifically, the production of the raw materials used to make them? Let us know your thoughts on this story in the comments section below.
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