SEC Investigates Kodak's Federal Loan, Stock Surge
Last week, Kodak announced, it had secured a seven hundred, sixty five, million dollar loan from the Federal Government under the Defense Production Act to shift gears for making photo supplies to drug ingredients. Now, we've learned that the Securities and Exchange Commission is investigating the deal joining me now with more details is Wall Street Journal reporter Dave, Michaels? So Dave Codex shares surged after news about this loan broke, and that got the attention of the Securities and Exchange Commission. What can you tell us about what they're now looking into? Well, we understand that the SEC has opened up. An investigation they're looking at trading in the shares just before the loan announcement was officially made, and then also how the in the news about the loan was communicated to the wider market. Why is that potentially a problem that Kodak had shared news of this deal with some media outlets before making this public wouldn't be a violation of criminal law, but but it could be a violation of the regulations that apply to public companies, which they can be straightforward. They can also beat her technical, but suffice it to say that public companies have to have a lot of rigor around how they communicate. Information, that is information that is going to influence investors decisions about whether to buy a seller, hold on a shares and if the company released information. About the control loan before the initial announcement in released in a way that was. Haphazard or not well thought through and then that information. Leaked down in some form or fashion to the wide broader market people traded on it than that could be a problem for Kodak as a public company just in terms of their responsibilities in terms of how they're supposed to control the flow of material information. So what are some of the questions still surrounding this deal that our team is looking into right now including this question about the disclosure in the communication? Of the loan, we're still looking into the loan itself in Kodak is saying that. Alone details are not fully finalized and yet the announcement was made last week that it was going to be getting seven, hundred, sixty, five, million dollar loan. So announcing net to the broader market, ensure holders developed certain expectations about how that's going to change. Kodak's business. But the loan is in guaranteed is not finalized. Query whether whether it was appropriate to make make that announcement at the time. We're also looking into continue to look into some of the equity options grants that were made to executives directors in the day before the day, just before the official announcement was made. So Dave, what are the potential outcomes from an SEC investigation of this sort? What can we see come out of this and when? You know we understand this is Very early days of this, I mean after all the announcement was just made last week, so it could take. Months to learn anything from either the company or potentially in the SEC. If actually brought any sort of official claims against the company. So we won't. We won't know anytime soon, and also it's also not clear that this would result in in a in former allegations of wrongdoing SEC opens up investigations all the time they ask questions, they do the dig into something, they take testimony and they might decide you know, hey, this, this was a little weird wasn't perfect way went down, but there's not a clear regulatory violation. Yourself is just something that I think people who are interested in Kodak Interested in in this story would just have to stay tuned.