Kodak's (KODK) - Get Report disclosure that it was in line for a government loan and the surrounding stock-trading activity are the focus of an Securities and Exchange Commission investigation, a media report says.
People familiar with the matter told The Wall Street Journal of the probe. They said it was at an early stage and might not result in allegations of wrongdoing.
Last month, Kodak said it had received a letter of interest from the government, putting in line to receive a $765 million loan to boost production of a variety of pharmaceuticals.
The erstwhile photography giant now makes print and advanced materials and chemicals. And it was tasked with making ingredients for generic drugs.
The U.S. International Development Finance Corp. made the loan to Kodak under the Defense Production Act. The government hopes to curb U.S. dependency on pharmaceuticals made overseas, The Wall Street Journal reported.
Sen. Elizabeth Warren on Tuesday had called on the SEC to probe possible insider trading in Kodak shares, citing "unusual trading activity prior to the announcement" of the company's recent receipt of a government loan.
The unusual trading activity in Kodak shares raised "questions about whether one or more individuals may have engaged in insider trading or in the unauthorized disclosure of material nonpublic information regarding the forthcoming loan awarded under the Defense Production Act," the senator said in an Aug. 3 letter to SEC Chairman Jay Clayton.
Kodak shares last week had run up as high as $60 and volume surged on the news that the Rochester, N.Y., company had received the loan. At last check, they were off 10% at $13.44.
A Kodak spokesperson said the Rochester, N.Y., company intends to fully cooperate with any potential inquiries.