Reuters / Steve Marcus
- The Securities and Exchange Commission is investigating trading in Eastman Kodak shares ahead of the public announcement of a $ 765 million government loan to manufacture drug ingredients, the Wall Street Journal said Tuesday.
- Kodak stock rose up to 2,1
- Warren wrote in a letter Monday to the SEC to investigate individuals and companies that had done large business with Kodak shares prior to the July 28 announcement and to check whether anyone had shared information about the loan within Kodak, before it was released.
- “This is just the latest example of unusual trading activity that involves an important decision by the Trump administration,” Warren wrote in Monday’s letter.
- See Kodak stock trading live here.
The Securities and Exchange Commission is reviewing Eastman Kodak’s stock trading after the price has risen due to news of a $ 765 million government loan, the Wall Street Journal reported Tuesday afternoon.
The loan, intended to help Kodak manufacture coronavirus drugs, was announced publicly on July 28. After the announcement, the Kodak share rose by up to 350%. Shares continued to rise on July 29, immediately achieving a two-day gain of 2,190%.
Still, the stock rose up to 26% the day before the announcement, raising questions as to whether insiders are trading information about the government loan.
The investigation is at an early stage and it is unclear whether misconduct allegations will be made, a source told the journal. The agency is investigating how Kodak dealt with the government loan disclosure.
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Senator Elizabeth Warren wrote in a letter Monday asking the agency to investigate “several cases of unusual trading activity prior to the announcement of this deal”.
“This is only the latest example of unusual trading activity that involves an important decision by the Trump administration,” wrote Warren. The senator cited earlier letters about possible insider trading in defense stocks and goods prior to government attacks in Iran.
The Massachusetts Democrat noted that the rally may be due to the early release of the government loan. The Wall Street Journal reported on July 29 that stories and tweets from TV stations in Kodak’s hometown of Rochester, NY may have brought the news to the attention of retailers. Kodak’s trading volume reached 1.6 million shares at the end of the day, well above the average daily volume of 231,000 in the previous month.
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Prior to the July 28 announcement, Warren urged the SEC to consider individuals and companies that do large business with Kodak shares, how familiar those parties were with non-public information, and whether they were sharing information about the loan. The agency should also consider whether Kodak meets the relevant disclosure requirements after the deal was announced in early reports.
Kodak was trading at $ 15.38 per share on Tuesday at 12:17 p.m. ET, an increase of 273% since the beginning of the year.
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