Massachusetts Senator Elizabeth Warren is calling on the Securities and Exchange Commission to investigate what she calls possible insider trading in connection to last week's announcement that Kodak was getting into the drug-making business.

In her letter to the SEC, Senator Warren says CEO Jim Continenza and board member Philippe Katz bought thousands of shares of company stock five days before the announcement. 

The company is getting a $765 million federal grant to start making pharmaceuticals at Eastman Kodak Park. Kodak stock shot up to more than $50 per share following the news.

Warren's letter said in part:

"The purchase of stock by Mr. Continenza and Mr. Katz while the company was involved in secret negotiations with the government over a lucrative contract raises questions about whether these executives potentially made investment decisions based on material, non-public information derived from their positions."

Warren also says Kodak failed to properly embargo the news to Rochester media the day before the announcement, leading to word getting out early.

She says per SEC rules, Kodak should then have fully disclosed the grant.

An external spokesman, retained after the events in question, responded to the disclosure issue:

"The Company’s internal communications team did not intend for the news to be published by the outlet in question."

Continenza told CNBC last week that he didn't know whether the information was leaked early.

A spokesman for Kodak issued a statement in response to Warren's calls for a SEC investigation:

"The Company intends to fully cooperate with any potential inquiries."

In regards to the pharma deal, a company spokesman issued the following statement on Tuesday:

"The loan agreement has not been finalized. The Company has a letter of interest (LOI) from the government, which indicates that Kodak has successfully completed the DFC’s initial screening.  The DFC will next initiate a diligence period before potentially committing financing. 

Kodak has more than 100 years of experience in chemicals and advanced materials and has manufactured unregulated KSMs for more than four years. Kodak Pharmaceuticals would produce critical pharmaceutical components that have been identified as essential but have lapsed into chronic national shortage.

The Company’s manufacturing facility in Rochester, NY and operations in St. Paul, MN are well-positioned to support this initiative. Our existing biomanufacturing and chemical processing facilities and best-in-class R&D could be operationalized to begin supporting the development of generic pharmaceutical components - creating jobs, supporting local economies and helping secure the US pharma supply chain."

A spokesman for Kodak also issued a statement on executive stock options and Jim Continenza:

"Mr. Continenza has regularly purchased Kodak shares with his own money since joining the Company in 2013 (first on the board, then as Executive Chairman in 2019)… because he strongly believes in the long-term success of the Company. In fact, Mr. Continenza has invested more capital in Kodak than he has earned during his tenure.  Mr. Continenza has purchased shares at nearly every available window in which he is eligible since he joined the Company. He has not sold a single share of stock during his time at Kodak.

When the Company issued convertible notes in 2019 to repay the Company’s imminently maturing bank debt, the Board of Directors recognized the potential for the issuance to significantly reduce the value of Mr. Continenza’s position in the Company if the shares were converted to stock.  At that time and until 2020, Kodak lacked sufficient shares to issue additional options.  Following stockholder approval at Kodak’s Annual Meeting in May 2020, the Compensation, Nominating & Governance Committee approved the options at its first meeting since the annual stockholders meeting, on Monday, July 27, 2020.

When Mr. Continenza answered the Board’s call to serve as Executive Chairman, he insisted an employment agreement and compensation plan without any severance and declined an offer for a performance bonus following the successful sale of the Flexographic Packaging Division in 2019."