Eastman Kodak shares plummeted 40 percent Monday after a federal agency paused the company’s deal to produce pharmaceutical ingredients until “allegations of wrongdoing” are resolved.
Last month, under an agreement aimed at reducing U.S. reliance on China, the U.S. International Development Finance Corp., or DFC, said it would give the photography pioneer a $765 million loan to make the ingredients.
The DFC normally funds infrastructure and other projects in the developing world. But in an executive order signed in May, President Trump gave DFC new powers under the Defense Production Act to finance domestic health-care manufacturing needed to respond to the coronavirus crisis.
News of the deal sent Kodak stock soaring. But last Tuesday, Sen. Elizabeth Warren (D-Mass.) asked the Securities and Exchange Commission to launch an insider trading inquiry, noting the unusually high volume of trading activity the day before the deal was announced.
Later that day, Wall Street Journal reported the SEC had opened an investigation of the circumstances surrounding the loan announcement. The SEC declined to comment on Warren’s letter or the Journal report.
DFC announced in a Friday evening tweet that it would “not proceed any further unless these allegations are cleared.”
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