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N.Y. AG moves to force Kodak CEO to testify on insider trading

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Kodak

New York Attorney General Letitia James said Tuesday she has filed a petition in New York Supreme Court in New York to force Eastman Kodak Co.’s CEO to publicly testify about his alleged insider trading during the pandemic.

Ms. James said in a press release that Jim Continenza, CEO of the Rochester, New York-based company, should testify about his purchase of more than 46,000 shares of Kodak stock early last summer and on Kodak’s subsequent false statements about that trading to investors last month.

The statement said Mr. Continenza’s stock purchase occurred in the middle of last June’s COVID-19 public health crisis. It said he made the purchase while he was leading secret discussions with the Trump White House and the federal government for a loan to enable Kodak to repurpose legacy assets in Rochester to produce chemicals to address the pandemic.

The petition states that just over a month after Mr. Continenza’s stock purchase, Kodak signed a public letter of interest with the federal government for a $765 million loan to develop a new business to produce the chemicals, which led to the stock price reaching more than 27 times what Mr. Continenza had paid for it.

The petition also asks the court to order public testimony from Kodak’s general counsel as well as for the company to produce related documents.

Kodak said in a statement, “Prior to this filing, the Company repeatedly offered to make witnesses available and the Attorney General repeatedly declined. It is telling that she has now chosen to publicly seek this order asking for the very testimony in which she previously had no interest.

“Mr. Continenza was not in possession of material non-public information and, contrary to the Attorney General’s allegations, his small stock purchase was pre-approved by Kodak’s General Counsel during an open trading window in accordance with Kodak’s insider trading policy and was subsequently found to be compliant by outside counsel in an independent investigation. Importantly, Mr. Continenza has purchased Kodak stock in virtually every open window period – and has never sold a single share.

“In addition to being wrong on the facts, the Attorney General’s novel and highly problematic legal theory that seeks to impose liability in the absence of intent 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 insider trading.

"We are confident that the facts and the law are on our side and are prepared to present our case in court if there becomes a need to do so.”

It was reported in May that Ms. James’ office was preparing an insider trading lawsuit against Kodak and Mr. Continenza, focusing on the issue.

More insurance and risk management news on the coronavirus crisis here.

 

 

 

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