WILMINGTON, Del., Aug. 14, 2020 (GLOBE NEWSWIRE) -- Rigrodsky & Long, P.A. announces that a complaint has been filed in the United States District Court for the District of New Jersey on behalf of all persons or entities that purchased the common stock of Eastman Kodak Company (“Kodak” or the “Company”) (NYSE: KODK) between July 27, 2020 and August 7, 2020, inclusive (the “Class Period”), alleging violations of the Securities Exchange Act of 1934 against the Company and certain of its officers (the “Complaint”).
If you purchased shares of Kodak during the Class Period, or purchased shares prior to the Class Period and still hold Kodak, and wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Seth D. Rigrodsky or Timothy J. MacFall at Rigrodsky & Long, P.A., 300 Delaware Avenue, Suite 1220, Wilmington, DE 19801, by telephone at (888) 969-4242, by e-mail at info@rl-legal.com, or at http://rigrodskylong.com/cases-eastman-kodak-company.
The Complaint alleges that throughout the Class Period, defendants made materially false and misleading statements, and omitted materially adverse facts, about the Company’s business, operations and prospects. As a result of defendants’ alleged false and misleading statements, the Company’s stock traded at artificially inflated prices during the Class Period.
According to the Complaint, on July 27, 2020, Kodak issued a statement to media outlets based in Rochester, New York, where it is headquartered, 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. Following media publication of Kodak’s initial statement about the deal, the Company claimed this information was released inadvertently.
On the same day, to further a scheme to profit from the use of material non-public information about the 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. Additionally, the Company 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, well below the lowest conversion price, meaning these options were “out of the money” when they were awarded. That would immediately change to an astronomical degree the very next day.
On July 28, 2020, the price of Kodak’s shares jumped 200%, from $2.62 per share on July 27, 2020 to $7.94 per share, following news that the Company had won a $765 million government loan from the U.S. International Development Finance Corporation (“DFC”) under the Defense Production Act (“DPA”) 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. This massive stock price increase allowed Defendant Continenza and other Kodak insiders to enrich themselves spectacularly from the compensation scheme, as their stock options were now very much “in the money.” Continenza alone saw the value of his options go from zero to $50 million in just 48 hours.
On August 5, 2020, several Congressional committees sent a joint letter to Defendant Continenza seeking documents about the loan, insider trading, and stock options for their review of “DFC’s decision to award this loan to Kodak despite your company’s lack of pharmaceutical experience and the windfall gained by you and other company executives as a result of this loan” which raised “questions that must be thoroughly examined.” The committees also sent a document request to the DFC’s Chief Executive Officer on the same day, inquiring about the Kodak loan, which the letter noted was “an organization that was on the brink of failure in 2012 and was unsuccessful in its previous foray into pharmaceutical manufacturing.”
Finally, in response to increasing public awareness and Congressional and regulatory scrutiny of Kodak’s fraudulent scheme, the DFC paused the deal. On August 7, 2020, after the market closed, the DFC announced, “On 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, shares of Kodak fell almost 28%, closing at $10.73 per share on August 10, 2020, on heavy trading volume.
If you wish to serve as lead plaintiff, you must move the Court no later than October 13, 2020. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Any member of the proposed class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
