New York Attorney General Letitia James has threatened to sue photography company Eastman Kodak and its CEO over alleged insider trading, the company revealed Monday.
The expected lawsuit focuses on a series of stock purchases made by the company’s top executive, Jim Continenza, ahead of a since-derailed $765 million deal with the US government to produce drug ingredients, Kodak said in its quarterly earnings report.
The disclosure from Kodak, which was listed under commitments and contingencies, said the alleged violations were in connection with Continenza’s purchase of 46,737 shares of Kodak stock on June 23.
About a month later, Kodak and the Trump administration announced a deal that would give the ailing camera company $765 million under the Defense Production Act to support the production of drug ingredients critical to fighting the pandemic.
The announcement sent shares of the company soaring from just over $2 per share to a peak of $60.
But the stock price had already begun to move a day before after Kodak prematurely announced the deal to news outlets in the company’s hometown of Rochester.
The Wall Street Journal reported at the time that Kodak had sent out an early notice to local outlets — then scrambled to get them to delete the stories and tweets until it was formally announced.
The mess prompted the Securities and Exchange Commission and several Congressional committees to investigate the handling of the deal — as well as the questionable stock option grants awarded to Continenza and other executives ahead of the announcement.
In early August, the federal government said it was halting the deal as regulators looked into suspicious trading activity.
The company retained the DC law firm Akin Gump Strauss Hauer & Feld last year to conduct an internal review, which found that Continenza’s transactions did not violate company policy or securities laws.
However, the law firm did find “gaps” in the company’s insider-trading policies.
In Monday’s disclosure, Kodak said Continenza’s stock trades were made during an acceptable “open window” period. It added that the transactions were preapproved by Kodak’s general counsel.
Continenza has never sold any Kodak shares, the company added Monday.
“The company considers the threatened claim to be unsupported by law or fact and intends to vigorously defend itself against the threatened claim should it be filed,” Kodak said in the disclosure.
The New York attorney general’s office did not return The Post’s request for comment.
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