Kodak Inside Traders Charged Before Announcement Of Covid Loan

Former pharmaceutical executives and their cousins were charged on Thursday with insider trading in Eastman Kodak Co stock based on tips that the company was lining up a $765 million loan to make pharmaceuticals during the Covid-19 pandemic.

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Prosecutors alleged that Andrew Stiles was employed by a company that was working with Kodak to obtain the federal loan. During his employment, he provided his cousin Gray Stiles with material non-public information about Kodak's loan application.

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Before the July 28, 2020 announcement, Kodak shares traded at $2.62 before DFC loan was announced.

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The stock price of the Rochester, New York-based company, well known for cameras and film, soared up to $60 within just two days, reflecting investors' surprise at the company's repositioning efforts.

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Gray Stiles and Andrew Stiles made more than $700,000 and $500,000 in profits, respectively, from their illegal trading in Kodak stock, according to the indictment.

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In the indictment, it is described that there were coded text messages sent between the defendants about the loan, including one where Gray Stiles referred to it as a “film we sent off a few weeks ago to get developed.”

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Andrew Stiles sent his cousin a text message with the message "tmw," prompting Gray Stiles to respond with "hot damn," according to the indictment.

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A request for comment from the defendants' lawyers was not immediately responded to. It was announced that the charges would be brought by U.S. Attorney Damian Williams in Manhattan.

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The arrests took place in South Carolina and Virginia, respectively, where Andrew Stiles lived and Gray Stiles lived.

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Both defendants were charged with three counts of securities fraud and one count of conspiracy.

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No charges were brought against Kodak. Last April, the DFC notified the company that it would not be able to make the loan.

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