May 27, 2021 - The case was transferred to the U.S. District Court for the Western District of New York.

August 13, 2020 - An investor in shares of Eastman Kodak Company (NYSE: KODK) filed a lawsuit in the U.S. District Court for the District of New Jersey over alleged violations of Federal Securities Laws by Eastman Kodak Company in connection with certain allegedly false and misleading statements made between July 27, 2020 and August 7, 2020.

On May 14, 2020, President Donald J. Trump signed an Executive Order delegating authority to the U.S. International Development Finance Corporation (“DFC”) to make loans under the Defense Production Act to increase supply chains in response to the COVID-19 outbreak. Following the order, Eastman Kodak Company negotiated with the DFC to receive a loan under this program. In June 2020, Eastman Kodak Company insiders purchased tens of thousands of the Company’s shares.

Then on July 27, 2020, Eastman Kodak Company awarded its Executive Chairman James Continenza 1.75 million stock options, and three other executives a total 135,000 stock options. The following day, Eastman Kodak Company and the DFC announced that Eastman Kodak Company would receive a $765 million loan to produce drugs to treat COVID-19, the first loan made under the new government program. In response to this announcement, Eastman Kodak Company’s stock price rose from $2.09 per share on July 23, 2020 to as high as $60.00 per share on July 29, 2020. Due to this massive increase, the pre-announcement stock purchases and stock options grants of insiders also skyrocketed in value. James Continenza alone saw the value of his July 27 options grants increase to $50 million in just 48 hours.

On August 1, 2020, an article reported new details of the “unusual” 1.75 million option grant to James Continenza, which “occurred because of an understanding” between James Continenza and Kodak’s Board of Directors “that had previously neither been listed in his employment contract nor made public.” In reaction to the news, Eastman Kodak Company’s stock price declined to close at $14.94 on August 3, 2020.

Then on August 4, 2020, before the market opened, it was reported that U.S. Senator Elizabeth Warren submitted a letter to the SEC requesting an investigation of the deal and Eastman Kodak Company for apparent violations of securities laws and SEC regulations. Senator Warren’s letter stated that each Kodak insider stock purchase “made while the company was involved in secret negotiations with the government over a lucrative contract raises questions about whether these executives potentially made investment decisions based on material, non-public information derived from their positions.” On the same day, the Wall Street Journal reported that the SEC commenced an investigation into “how Kodak controlled disclosure of the loan, word of which began to emerge on July 27, 2020.”

Additionally, the article stated that “[t]he SEC is also expected to examine the stock options granted to executives on July 27,” which “instantly became profitable” when Kodak’s government loan was announced. Shares of Company’s stock price declined to as low as $12.86 per share on August 4, 2020. The next day, it was reported that several Congressional committees sent a joint letter to James Continenza seeking documents about the loan, insider trading, and stock options for their review of “DFC’s decision to award this loan to Kodak despite your company’s lack of pharmaceutical experience and the windfall gained by you and other company executives as a result of this loan” which raised “questions that must be thoroughly examined.”

On August 7, 2020, after the market closed, the DFC announced, “On 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.” Shares of Eastman Kodak Company (NYSE: KODK) declined to $8.50 per share on August 10, 2020.

According to the complaint the plaintiff alleges on behalf of purchasers of Eastman Kodak Company (NYSE: KODK) common shares between July 27, 2020 and August 7, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between July 27, 2020 and August 7, 2020, the Defendants failed to disclose that the Company had granted James Continenza and several other Company insiders millions of dollars’ worth of stock options, immediately prior to the Company publicly disclosing that it had received the $765 million loan, which Defendants knew would cause Kodak’s stock to immediately increase in value once the deal was announced, and that in addition, while in possession of this material non-public information, James Continenza and other Company insiders purchased tens of thousands of the Company’s shares immediately prior to the announcement, again at prices that they knew would increase exponentially once news of the loan became public.