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Report: NY attorney general preparing insider-trading lawsuit against Kodak

Top of Kodak Office Tower houses falcon nest box.
WXXI Photo
Top of Kodak Office Tower houses falcon nest box.

The New York Attorney General’s office is preparing an insider-trading lawsuit against Eastman Kodak and its CEO and Executive Chairman, Jim Continenza, according to Reuters and financial filings on Monday.

The Reuters story says the pending lawsuit focuses on stock purchases that preceded a proposed deal during the Trump administration to finance a pharmaceutical venture during the COVID-19 pandemic.

According to a financial filing Monday, the AG’s civil case centers on Continenza’s June 23, 2020 purchase of nearly 47,000 Kodak shares.

The trades happened before White House officials unveiled a tentative agreement to lend the company $765 million to back production of pharmaceutical components to help fight the pandemic.

Kodak’s stock had initially soared last year, but then fell sharply over several days and the Trump administration halted Kodak’s loan application.

A spokesperson for the state attorney general had no immediate comment when contacted by WXXI News on Monday.

Kodak noted in its financial filing that Continenza’s stock purchase was made in compliance with the company’s insider trading policy, and it also noted the CEO has never sold any Kodak shares. Kodak said in its filing that it considers “the threatened claim to be unsupported by law or fact and intends to vigorously defend itself against the threatened claim should it be filed.”

Kodak also provided this statement to WXXI News:

"The Attorney General has threatened to file a lawsuit premised on an unprecedented and novel application of insider trading law that seeks to impose liability in the absence of evidence of intent.  The threatened litigation would not be supported by legal precedent or the facts.  Mr. Continenza did not engage in insider trading.  He was not in possession of material non-public information when he made the trade at issue, and his small stock purchase fully complied with Kodak’s insider trading policies, was pre-approved by Kodak’s General Counsel, and was subsequently found to be compliant by outside counsel in an independent investigation."

"Importantly, Mr. Continenza has bought Kodak stock in virtually every open window period – and has never sold a single share.   As we understand the Attorney General’s theory, the contemplated lawsuit would have a chilling effect on directors and executives of every public company, who could never invest in their own companies without fear of having good-faith decisions, pre-approved by counsel, second-guessed by regulators and charged as violations of law.” 

Randy Gorbman is WXXI's director of news and public affairs. Randy manages the day-to-day operations of WXXI News on radio, television, and online.