Updated: August 04, 2020 10:30 PM
Created: August 04, 2020 06:13 PM
ROCHESTER, N.Y. (WHEC) — The circumstances around the major Kodak deal that shot up its stock price is now being looked at by the federal Securities and Exchange Commission. The story is reported by the Wall Street Journal and CNBC Tuesday.
It was one week ago that Kodak got a $760 million loan to make ingredients for generic drugs. The Journal reports SEC is investigating the way Kodak handled the announcement of the deal and the impact on its stock price.
The WSJ story says "The SEC's investigation is at an early stage and might not produce allegations of wrongdoing by the company or any individuals, the people said. Among the areas being probed by regulators: how Kodak control disclosure of the loan, which began to emerge on July 27, one day before the official announcement, causing Kodak to stock price to rise 25% that day."
On Tuesday, July 28 at Kodak Center, the executive chair of Kodak, Jim Continenza and the head of the Development Finance Corporation or DFC signed the deal. In May, President Donald Trump authorized the DFC to loan Defense Department money to increase national security and secure supplies during the COVID-19 crisis.
The DFC loaned Kodak $760 million dollars of defense money to become the nation's leader in making generic drug material. In five years, Kodak is supposed to make 25% of all the ingredients for generic drugs sold in the United States.
The Kodak stock blew up. It went from $2 a share to more than $43 a share.
On Tuesday the 28th, the White House director of trade and manufacturing, Dr. Peter Navarro said, "What we've set in motion is one of the greatest projects in American industrial history right here today in Rochester."
But on Monday, July 27 at 11:23 a.m., Kodak sent a press release alerting News10NBC and other media outlets to the announcement. The release said there would be a "new manufacturing initiative" that could "change the course of history for Rochester and the American people." That release was published.
One hour and 15 minutes later, the White House emailed News10NBC and other media outlets saying the press release was "off the record."
But by the end of Monday, Kodak stock jumped to $7 a share. In fact, the average volume of Kodak stock bought and sold per day from July 13 to July 24 was 110,000. On Monday, July 27, it jumped to 1.6 million.
The SEC website shows stock options registered for Kodak leadership. The options were dated Monday, July 27.
I asked Kodak for a statement. The company never responded.
In an email, the SEC told me it "declines comment."
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