Eastman Kodak Company Class Action Lawsuit
- Company Name
- Eastman Kodak Company
- Stock Symbol
- Class Period
- July 27, 2020 to August 7, 2020
- District of New Jersey
The Eastman Kodak Company class action lawsuit charges Kodak and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Kodak common stock between July 27, 2020 and August 7, 2020, inclusive (the “Class Period”). The Kodak class action lawsuit was commenced on August 13, 2020 in the District of New Jersey and is captioned Tang v. Eastman Kodak Company, No. 20-cv-10462.
Kodak is a technology company that provides hardware, software, consumables, and services to customers in commercial print, packaging, publishing, manufacturing, and entertainment. On July 27, 2020, Kodak issued a statement to media outlets 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.
As alleged by the Kodak class action lawsuit, on the same day, July 27, 2020, to further a scheme to profit from the use of material non-public information about the DFC deal before its official disclosure, 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 per share. Kodak also awarded 45,000 stock options each to its CFO, defendant David Bullwinkle, Vice President Randy Vandagriff, and General Counsel Roger Byrd. On the day these options were awarded, Kodak’s stock price closed at $2.62 per share, meaning these options were “out of the money” when they were awarded. The following day, the price of Kodak shares jumped 200% following news that Kodak had won a $765 million government loan from the DFC under the Defense Production Act to produce pharmaceutical materials, including ingredients for COVID-19 drugs. Shares continued to surge by over 300% the next day to close at $33.20 per share on July 29, 2020.
On August 1, 2020, a Reuters article reported new details of the “unusual” 1.75 million option grant to defendant Continenza. The article emphasized that the options 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’s stock price fell nearly 32%.
Then, on August 4, 2020, an article published on CQ Roll Call reported that U.S. Senator Elizabeth Warren had submitted a letter to the U.S. Securities and Exchange Commission (“SEC”) requesting an investigation of the deal and Kodak for apparent violations of the securities laws and SEC regulations. Also that day, according to an article published in The Wall Street Journal, the SEC commenced an investigation into “how Kodak controlled disclosure of the loan, word of which began to emerge on July 27, 2020.”
Finally, in response to increasing public awareness and Congressional and regulatory scrutiny of Kodak’s alleged fraudulent scheme, the DFC paused the deal. On August 7, 2020, 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, Kodak’s stock price declined nearly 28%.
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