
The Problem with Insider Giving
For a brief moment last month, Kodak Corporation’s stock soared from $2 a share to more than $33 a share on news that it might obtain substantial government financing. At that peak, Kodak director George Karfunkel unloaded shares then worth $116 million. If he had sold them, he might have been at grave legal risk. As a director, Karfunkel likely had nonpublic information about Kodak’s prospects, and, if so, his fiduciary duties would have forbidden him from trading. But Karfunkel didn’t sell his shares – he gave them to a charity he runs.