Two individuals admit to insider trading in Kodak ahead of Trump loan announcement

Two individuals admit to insider trading in Kodak ahead of Trump loan announcement

By Jonathan Stempel

NEW YORK (Reuters) – A former pharmaceutical executive and his cousin pleaded guilty on Wednesday to insider trading at Eastman Kodak, based on reports the company was securing a surprise loan of $765 million from the Trump administration to manufacture pharmaceutical ingredients.

Andrew Stiles and Gray Stiles each admitted to one count of securities fraud during a hearing before U.S. District Judge Ronnie Abrams in Manhattan.

The two defendants were accused of purchasing Kodak shares in anticipation of the U.S. International Development Finance Corporation loan to the former photography giant, and selling them after the loan was announced on July 28, 2020. .

Prosecutors said it generated more than $500,000 in illegal profits for Andrew Stiles and more than $700,000 for Gray Stiles.

Lawyers for the defendants did not immediately respond to requests for comment.

Andrew Stiles was a vice president at Phlow, a Richmond, Va.-based drug supply chain company that works with Kodak, when he allegedly learned of the loan and informed his cousin.

An indictment included coded text messages between the two men, including in which Gray Stiles referred to the loan as “film we sent over a few weeks ago to develop.”

Sentencing is scheduled for July 24.

Andrew Stiles, of Charleston, South Carolina, faces a sentence of 21 to 27 months in prison under his plea agreement. Gray Stiles, of Richmond, could be sentenced to 10 to 16 months. Fines are also possible.

Shares of Kodak, based in Rochester, N.Y., soared from $2.62 to $60 in the two days after the loan announcement, as the company sought to rebuild.

At a press briefing, Trump called Kodak a “great American company” with “one of the greatest brands in the world” and said the loan would give it the capacity to produce up to 25% of the active ingredients necessary for the production of generic drugs. on a national level.

“We must never depend on a foreign country for America’s medical or other needs,” Trump said.

The loan was never granted.

Both defendants also faced related civil charges from the United States Securities and Exchange Commission. This case has been stayed pending a resolution of the criminal case.

Kodak and Phlow have not been charged.

The case is US v. Stiles et al, US District Court, Southern District of New York, No. 23-cr-00098.

(Reporting by Jonathan Stempel in New York; editing by Richard Chang)

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