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Kodak stock dives 40% after $765 million loan is put on hold

An exhibitor holds the Eastman Kodak Co. Printomatic instant print camera during the 2018 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Wednesday, Jan. 10, 2018. Electric and driverless cars will remain a big part of this year's CES, as makers of high-tech cameras, batteries, and AI software vie to climb into automakers' dashboards. Photographer: David Paul Morris/Bloomberg via Getty Images

(CNN) — Kodak stock plunged 40% in premarket trading Monday after a $765 million loan from the US government to help make drug ingredients was put on hold, as regulators are reportedly looking into allegations of insider trading.

“Recent allegations of wrongdoing raise serious concerns,” the US International Development Finance Corporation said in a tweet Friday afternoon. “We will not proceed any further unless these allegations are cleared.”

The DFC’s announcement came a few days after questions arose about heavy trading volume for Kodak’s stock, which soared as much as 2,757% following the initial July 29 announcement.

Kodak executives including CEO Jim Continenza are also under criticism about receiving stock options on July 27, a day before the loan announcement.

Last week the Wall Street Journal reported the Securities and Exchange Commission is investigating why Kodak announced the loan on the day prior to the official announcement, which sent shares 25% higher. The Journal saida local TV station in Kodak’s home of Rochester, New York, published a media advisory about the upcoming announcement, adding that the station had not been given an embargo on the news.

The $765 million loan was meant to launch Kodak Pharmaceuticals, which will produce generic active pharmaceutical ingredients to reduce America’s dependency on foreign drug makers. The company would hire some 350 workers, most in New York state, and create approximately 1,200 indirect jobs.

Kodak didn’t immediately respond for comment.

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