Kodak Loan

Buyers and industry affiliates pass by the Kodak exhibit at the 2012 International CES trade show in Las Vegas. 

Shares of Kodak are sharply higher after an independent legal review found that while there were flaws in how Eastman Kodak issued stock option grants to its CEO just before revealing a major development that sent its stock soaring, no illegality was involved.

In late July the U.S. International Development Finance Corporation signed a letter of intent to potentially give the photography pioneer a $765 million loan to help pay for factory changes needed to make pharmaceutical ingredients in short supply in the U.S.

Shares surged from around $8 to more than $33 each in a day, at one point soaring as high as $60.

The grants to the company’s CEO, as well as a huge donation of company stock by a board member around the same time to an affiliated charity, caught the eye of both shareholders and regulators.

White house trade advisor Peter Navarro, who played a part in the process, blasted the company.

The review by the law firm Akin Gump Strauss Hauer & Feld, commissioned by a special Kodak board committee, found that Kodak’s general counsel failed to warn the company’s board that the timing of the grants for Executive Chairman and CEO Jim Continenza could look bad regardless of whether the grants were determined to be legal.