Following Sen. Elizabeth Warren’s call for an investigation of trades in Eastman Kodak Co. shares, the Securities and Exchange Commission has launched an insider trading probe, reports say.
Citing unidentified sources familiar with the alleged probe, the Wall Street Journal on Aug. 4 reported that an SEC investigation of Kodak stock trades has been launched.
In an Aug. 3 letter Warren called on SEC chairman Joseph Clayton to order an investigation into a July 27 spike in trades of Kodak shares. Warren, a Massachusetts Democrat who has long called for tighter regulation of Wall Street and the financial services industry, pointed to a sharp rise in the price of Kodak shares—which closed at $2.10 on Friday, July 24—and a jump in the number of shares traded on July 27, one day before Kodak officially announced that it is in line to get a $765 million government loan.
More than 1.6 million Kodak shares (NYSE: KODK) changed hands on July 27. In the prior week, Kodak’s daily share volume was averaged less than 100,000. After the deal was officially announced, Kodak’s share price rose as high as $60 before retreating to around $15.
“Individuals who purchased the stock immediately prior to the announcement earned an extraordinary return,” Warren wrote.
Meant to help Kodak launch a new pharmaceuticals manufacturing business, the Defense Production Act loan was officially announced by Kodak and government officials on July 28. The new Kodak division would produce a quarter of materials needed to make generic drugs and employ 360, mostly in Rochester, President Donald Trump predicted in a briefing.
Warren’s letter to the SEC cites news stories indicating that Rochester media outlets had not been told by Kodak to embargo the loan news. They posted early reports on the deal that may have sparked the July 27 trading spike. She said Kodak could have violated an SEC rule by not promptly disclosing the news once it had been made public.
Will Astor is Rochester Beacon senior writer.