SC and VA Cousins Accept Guilt in Trading Scheme | Business

In February 2023, cousins James A. “Andrew” Stiles of the Lowcountry and Edward G. “Gray” Stiles of Richmond, Va., pleaded guilty to insider trading in U.S. District Court in Manhattan after being charged with using confidential information about Eastman Kodak Co. to make over $1 million in illegal profits. The hearing took place where the securities fraud case was filed against the cousins, who misappropriated information related to potential government loans for Eastman Kodak Company to finance the production of Covid-19-related pharmaceutical components.

The scheme began almost four years ago when Andrew Stiles, a 38-year-old executive at drug manufacturer Phlow Corp., was working on a pandemic-era project with Eastman Kodak. His employer was assisting Eastman Kodak in applying for a large government loan that was disclosed on July 27, 2020, in the form of a $765 million “letter of interest.”

In the days following the announcement, Kodak stock significantly increased, reaching over 2,500 percent above its closing price prior to the news. Before the loan was made public, Stiles began sharing confidential information about the financing with his 39-year-old Virginia cousin. Edward Stiles asked for an update on July 9, 2020, in a “coded” text message regarding the film they sent off a few weeks prior to get developed. They bought approximately 130,000 shares of Eastman Kodak between June 2020 and the day the financing letter was announced, selling all of the stock shortly after and making a total of $1.2 million from the trades.

The cousins were charged with conspiracy and securities fraud for their actions and pleaded guilty to their crimes.

Overall, this case highlights how insider trading can have serious consequences not only for those involved but also for investors who are unaware of such activities.

The prosecutors stated that Andrew Stiles had stolen confidential information from Phlow Corp., which he used to make trades with his cousin Edward Stiles before sharing it with other investors.

Eastman Kodak’s stock price increased rapidly after news broke out about their application for government loans in July 2020.

Despite knowing that they were acting illegally, both Andrew and Edward continued their activities by buying stocks worth $1 million and selling them quickly for profit.

Their actions resulted in them being charged with securities fraud and conspiracy charges by federal authorities.

The trial is ongoing as both Andrew and Edward await sentencing proceedings while their cohorts continue fighting legal battles against charges brought forth by prosecutors.

By Sophia Gonzalez

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