On July 27, 2020, Kodak issued a statement to media outlets based in Rochester, New York, on the imminent public announcement of a “new manufacturing initiative” involving the U.S. International Development Finance Corporation (“DFC”) and the response to COVID-19. On the same day, Kodak granted its CEO and Executive Chairman, Defendant Jim Continenza, 1.75 million stock options at a conversion price of between $3.03 and $12.00 per share, and awarded 45,000 stock options to three other executives.
On July 28, 2020, Kodak’s shares soared 200% following news that the Company had won a $765 million government load from the DRC under the Defense Production Act to produce pharmaceutical materials, including ingredients for COVID-19 drugs. Shares continued to surge by over 300% on July 29. These massive increases allowed Company insiders to see massive profits.
On August 1, 2020, a Reuters article reported new details of the “unusual” 1.75 million option grant to Continenza, emphasizing that the award “occurred because of an understanding” between Continenza and Kodak’s Board of Directors “that had previously neither been listed in his employment contract nor made public.” On this news, Kodak shares fell 32%. Then on August 4, 2020, U.S. Senator Elizabeth Warren requested that the SEC investigate Kodak for apparent violations of the securities laws and SEC regulations. Then on August 7, 2020, after the market closed, the DFC announced that “[o]n July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.” On this news, the Company’s stock price plummeted a further 28%.