Kodak shares soar after boss is cleared of insider trading
Shares in Eastman Kodak surged more than 80pc on Wednesday after an independent review cleared its chief executive of insider trading.
Kodak boss Jim Continenza and Phillipe Katz, a board member, were handed stock options on July 27, the day before the firm was awarded a $765m US government loan to produce pharmaceutical ingredients.
The announcement caused shares in Kodak to soar from just $2 to as high as $30, significantly boosting the value of Mr Continenza and Mr Katz's stock options.
The US International Development Finance Corporation, which was negotiating the loan, put the deal on hold after the transactions came to light, saying it would not proceed further until allegations of insider trading were cleared.
An independent review conducted by Akin Gump, a US law firm, said on Tuesday that securities transactions made by Mr Continenza and Mr Katz around the time of the loan did not violate internal policies, but found certain "gaps" in Kodak's insider trading processes.
The review has recommended that Kodak changes its executive compensation practices and insider trading policies.
Rick Meckler, a partner at US investment firm Cherry Lane Investments, said: "Whether the US government accepts this analysis and restores its business relationship with the company remains an open question.
"For now, investors seem to feel it is worth speculating on given how high the stock rose on the initial news of the loan."
Kodak was founded in 1880 by George Eastman and became an industry leader in the manufacturing of household cameras.
In 2012 it filed for bankruptcy after becoming weighed down by pension costs and struggling to keep up with the shift to digital cameras. If the US government chooses to grant Kodak the loan, it will help the former giant of the photography industry fund a shift to pharmaceuticals.
Mr Continenza said Kodak was "committed to the highest levels of governance and transparency" and would follow the review's recommendations on policies and procedures.
"Expeditiously implementing these recommended measures will be critical as we continue to execute on our long-term strategy and transform our business for the future," he said.
