Shares of Kodak fell more than 40% on Monday after the U.S. government blocked a $765 million loan that the old film company was going to use to produce drug ingredients at its factories.
The U.S. International Development Finance Corporation was slated to grant Kodak the funds but said "Recent allegations of wrongdoing raise serious concerns," adding that it will not proceed until allegations are cleared.
Alarms were raised after senior Democratic lawmakers asked federal regulators to investigate securities transactions made by the company and its executives around the time it learned it could receive the government loan.
The day before the deal was announced there was heavy trading volume of Kodak shares...and once the loan was announced, shares rocketed more than 1,000%, generating a windfall for executives, some of whom had received options one day earlier.
The U.S. Securities and Exchange Commission is investigating, according to a report in the Wall Street Journal.