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Kodak soars as independent review says no laws were broken

September 16, 2020

While several governance problems stemmed from Eastman Kodak’s (NYSE:KODK) July announcement of a planned $765M loan from the U.S. government, a special committee hired by the board said none of those issues violated the law.

The stock soared before, and after, the announcement – which vaulted the onetime photography giant into drug manufacturing – but quickly turned into a roller coaster ride as shares fell precipitously.

Specifics: The special committee blamed disclosure issues on a junior employee, who was able to modify the media advisory in a way that made it appear as if the information wasn’t embargoed. On concerns surrounding the options grants, the special committee said there was no intent to manipulate their timing, and a well-timed gift made by Kodak board member George Karfunkel doesn’t appear to have violated federal securities laws.

Instead the committee recommended Kodak’s legal department to undertake additional hires, noting a lack of resources could be the root cause for the existence of some outdated policies. Policies should also be updated in regards to insider trading, the options-grant process and the process for managing contact with the media and other third parties.

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