Eastman Kodak’s pharmaceutical ambitions took a hit when insider trading charges put $ 765 million in US funding on the skids. But a special committee hired by Kodak’s board of directors has now cleared its senior officers of wrongdoing, a move that could pave the way for drug manufacturing.
The committee appointed by the board erased (PDF) Kodak executives and shareholders of insider trading after a series of questionable stock moves that followed a government loan deal. This $ 765 million loan has since been suspended.
The committee report said the pre-authorized stock trading for CEO Jim Continenza and board member Philippe Katz did not break the law or violate Kodak’s internal rules, as the loan status at the time of the loan authorization was “very uncertain”.
The committee also determined that two investors who sold millions of shares shortly after the loan was announced had not been notified in advance. And the incentive grants for Kodak executives were also appropriate given the uncertain status of the payment, the committee said.
The $ 765 million expenditure, which Kodak dubbed “Project Tiger” in its working stages, was to be attributed by the American International Development Finance Corporation (DFC). The DFC stopped these plans in early August after the Securities and Exchange Commission (SEC) and House Democrats launched their own investigations into Kodak’s behavior.
While effectively eliminating wrongdoing from Kodak, the committee recommended that the company strengthen its legal department and insider trading rules to avoid actions that would attract government attention.
In one declaration, Kodak has said it will pursue these recommendations “quickly”.