A now-former executive at an unnamed pharmaceutical company has been charged alongside his cousin for insider trading, after he revealed non-public information regarding potential government loans to Eastman Kodak Company (Kodak) to finance the production of "COVID-19-releated pharmaceutical components."
According to the Department of Justice, Andrew Stiles and his cousin Gray Stiles, both 37, were charged with three counts of securities fraud and conspiracy to commit wire fraud and securities fraud.
Andrew Stiles conducted an insider trading scheme in June-July 2020, misappropriating non-public information to trade Kodak stock. The unnamed company Andrew Stiles was working for was teaming up with Kodak to collaborate on the production of "chemicals for pharmaceutical manufacturing in connection with the COVID-19 pandemic."
The company was also assisting Kodak in an application for a government loan at the time, which was worth $765 million. Following a "letter of interest" from the government regarding the loan, Kodak stock rose upwards of 2,500% after the news of the loan.
After the letter of interested was publicized, Andrew Stiles purchased more than 90,000 Kodak shares within the first day. Gray Stiles purchased 30,000 shares, more than half of which were purchased the day prior to the scheduled announcement of the letter.
Andrew Stiles passed along information about federal loan applications to Gray Stiles via text message, telling his cousin "Tmw" about the date of the announcement. Within the same minute Gray Stiles replied "hot damn," and then the cousins proceeded to buy more than 10,000 shares each.
Also, on July 9, 2020, Andrew Stiles sent coded information to his cousin regarding a $655 million loan:
"GRAY: Any update on the film we sent off a few weeks ago to get developed
ANDREW: 600+. Maybe 2 weeks out
GRAY: I can live with that hahaha."
Andrew Stiles profited more than $500,000 from the stock trading, while Gray Stiles gained over $700,000.
“By stealing confidential business information, Andrew Stiles allegedly betrayed the trust and confidence of his employer — a pharmaceutical company working to help the public at the height of the COVID-19 pandemic — and schemed with his cousin, Gray Stiles, to collectively make more than a million dollars of illegal profits," said U.S. Attorney Damian Williams.
Each charge of securities fraud carries a maximum prison sentence of 20 years, while the duo's other charges each carry a maximum of five years in prison.
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