White House Advisor Blasts Kodak Executives: ‘You Can’t Fix Stupid’
White House trade advisor Pete Navarro went on the CNBC show “Squawk Box” this past Monday and ripped into Kodak’s executives. Referring to the allegations of insider trading on the eve of the $765 million deal Kodak struck with the US government, Navarro said what happened was “probably the dumbest decisions made by executives in corporate history.”
In case you haven’t been following this story, it began when Kodak was awarded a $765 million loan from the US government in order to pivot to drug production and bring some pharmaceutical manufacturing back to US shores. Kodak’s stock shot up nearly 2,000% on the announcement, but that spike didn’t last long.
Keen eyed observers and regulatory bodies alike noticed that trading volume on the stock increased significantly before the deal was officially announced, leading to serious accusations of insider trading. Kodak’s CEO has denied these allegations, saying this was a “pretty tight kept secret,” but both Kodak and the SEC are investigating what happened and the deal has been put on hold.
Enter Navarro:
“Based on what I’m seeing, what happened at Kodak was probably the dumbest decisions made by executives in corporate history,” says Navarro. “We don’t know why that happened or what they did, let the investigation happen […] and Kodak… I mean… it’s hard to be that… you can’t fix stupid Joe. You can’t even anticipate that degree of stupidity.”
One of the contributing factors—and possibly a scapegoat for Kodak—may be the fact that they sent a press release to local news outlets one day early without instituting any sort of “embargo.” As Forbes points out, this elementary PR gaff could make it difficult for the SEC to prove that the trading volume the day before the loan was officially announced was caused by insider trading.
Whatever the case, it will take some time before these investigations can run their course. In the meantime, Kodak’s stock tumbled back down from its high of $60 per share all the way down to less than $8. That said, $8 is still better than the stock’s $2 average before the pharma deal was announced.
(via CNBC)
