No one at Kodak, least of all CEO Jim Continenza, did anything wrong—legally speaking—vis-à-vis trading around the industrial artifact’s short-lived effort to become a pharmaceutical chemical supply giant with three-quarters of a billion taxpayer dollars. The big, fancy law firm it hired said so right here. Sure, Kodak could have been a bit more careful and a bit more transparent about things, but if it had been capable of those things than it probably wouldn’t be Kodak and in need of all of that money to change everything about itself.

Take Continenza’s purchase of roughly 47,000 shares for about $2 apiece as the company was negotiating that loan. Sure, Continenza knew about it, Kodak & co. acknowledge, but could he or anyone at Kodak know what it would really mean, materially-speaking? I mean, sure, 765 million low-interest Federal dollars to become a key player in the pharmaceutical supply chain in the midst of a global pandemic sounds really good and might even lead to, say, a more than 1,000% increase in share price. But what if, instead, investors focused on the fact that a failing, flailing company was taking on a large slug of new debt, however favorable the terms? What if the loan never happened, even after it was accidentally announced and then trumpeted by that most effective and efficient organizations, the Trump administration, as eventually actually happened? Then, you know, that would probably be pretty bad for the stock.

This potentially-believable-story-to-tell-a-jury is perhaps why the Securities and Exchange Commission has yet to act on its suspicions surrounding Kodak. But what if it didn’t matter? What if the trades could be construed as illegal in absence of intent, indeed in absence of an actual trade or an actual victim? Well, as it happens, thanks to Hank Greenberg’s failure, it doesn’t matter, and they can, and in the case of Kodak, they are.

The New York attorney general’s office is preparing an insider-trading lawsuit against Eastman Kodak Co and its top executive….

Investigators have built their case under the Martin Act, Kodak's filing said. The state law empowers the attorney general to investigate and bring financial fraud cases without proving intent or knowledge of wrongdoing.

Officials in the New York attorney general’s office have emphasized that legal leeway in their probe, the company said….

Kodak, in its statement, called the attorney general’s approach a "novel application of insider trading law that seeks to impose liability in the absence of evidence of intent." The Rochester, New York-based company said the contemplated lawsuit would discourage executives from investing in good faith alongside other shareholders due to fear that trades approved by internal lawyers could be second-guessed as unlawful.

Eastman Kodak says New York preparing insider-trading lawsuit [Reuters]

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