Questions being raised after Kodak's stock has a big moment

Eastman Kodak's potentially lucrative deal to help the U.S. government make more generic drugs domestically is threatening to turn into a regulatory headache for the fallen photography giant.

Kodak's depressed stock price surged last week before the company announced its plans to work with the President Donald Trump's administration in exchange for a $765 million loan. That prompted Sen. Elizabeth Warren to send a Monday letter asking the Securities and Exchange Commission to investigate whether insider trading laws have been broken.

The SEC is now in the early stages of a probe, according to a report published Tuesday by The Wall Street Journal. The newspaper cited unidentified people familiar with the matter.

The SEC declined to comment on the report.

Kodak said Tuesday that the Rochester, New York, company intends to cooperate with any potential inquiries, without saying whether it has been contacted by the SEC.

The company's stock soared on the July 28 news about the $765 million loan from the federal government to help Kodak make factory changes necessary to make pharmaceutical ingredients in short supply in the U.S. Its shares rocketed from around $2 to as high as $60 before some of its former debt was converted into stock as part of a complex arrangement.

The conversion resulted in Kodak issuing nearly 30 million additional shares, undercutting the value of the stock already outstanding. Kodak's stock closed at $14.40 after falling 3.6% in Tuesday's trading.

Any investigation is likely to focus in an abrupt rally and trading frenzy in Kodak's stock before the company and the Trump administration made their announcement. The rally may have triggered by some of the news being shared online on Twitter and websites by at least two reporters in Rochester and two...