Ex-Pharma Executive and Cousin Admit to Insider Trading of Kodak
Two individuals have pleaded guilty to insider trading in connection with a pandemic-related government loan to Eastman Kodak Co. Andrew Stiles, a former executive at Phlow Corp., and his cousin, Gray Stiles, admitted to securities fraud before US District Judge Ronnie Abrams in New York. The guilty plea follows their involvement in profiting from confidential information about a US government loan received by Kodak.
Andrew Stiles, based in Charleston, South Carolina, was employed at Phlow, a generic drugmaker collaborating with Kodak. Stiles purchased over 90,000 Kodak shares upon learning of the potential loan between June and July 2020. He then informed his cousin, Gray Stiles, based in Richmond, Virginia, who acquired more than 30,000 shares. When the $765 million loan was publicly announced on July 27, 2020, Kodak’s stock value surged, resulting in Andrew Stiles’ profit of over $500,000 and Gray Stiles’ earnings exceeding $700,000.
The two individuals engaged in coded text messages discussing the potential loan. Notably, when Kodak applied for a $655 million loan on July 9, 2020, Gray Stiles asked about an update on a film sent for development a few weeks earlier. Andrew Stiles responded with ‘600+’ and ‘Maybe 2 weeks out,’ to which his cousin replied, ‘I can live with that hahaha.’
The loan was also the subject of an insider-trading probe by New York Attorney General Letitia James, who alleged that Kodak’s CEO, James Continenza, violated state securities law by purchasing shares before the loan’s public announcement. Kodak has maintained that Continenza was pre-cleared to trade by the company’s general counsel.
The loan aimed to assist Kodak in repurposing its manufacturing facilities to address the shortage of drug ingredients during the early months of the pandemic, including those required for Covid-19 medications. The US Securities and Exchange Commission (SEC) also sued both Andrew Stiles and Gray Stiles, with the former making over $45,000 in May 2020 trading shares of Novavax Inc. after learning of its efforts to secure more than $300 million in funding to develop a coronavirus vaccine while working for BDO USA LLC, which had a consulting contract with Novavax.
