A former Equifax exec was today charged with insider trading for offloading almost $1m of shares before the company went public about the scandalous mass data breach.
The global credit reporting agency was hacked in May '17, which exposed the personal data of 148 million people. The firm discovered the breach at the end of July, but customers weren't informed until September.
It appears at least one exec, namely Jun Ying, CIO of the US information solutions unit and a rising star in Equifax, may have used the time delay and his inside knowledge to cash in his shares before the price crashed, the Securities and Exchange Commission stated.
"Ying, who was next in line to be the company's global CIO, allegedly used confidential information entrusted to him by the company to conclude that Equifax had suffered a serious breach," the SEC said in a statement.
It alleged that, before Equifax went public, Ying "exercised all of his vested Equifax stock options and then sold the shares, reaping proceeds of nearly $1 million".
The complaint said that by doing so, he had "avoided more than $117,000 in losses". That's because, once the news hit, Equifax's share price plummeted from about $142.72 to $93 at its lowest point.
Richard Best, director of the SEC's Atlanta regional office, alleged that Ying "used confidential information to conclude that his company had suffered a massive data breach, and he dumped his stock before the news went public".
He added: "Corporate insiders who learn inside information, including information about material cyber intrusions, cannot betray shareholders for their own financial benefit."
The SEC is seeking repayment of his ill-gotten gains, plus interest, penalties and injunctive relief.
In addition to the SEC's charge of insider trading, Ying is also facing criminal charges from the US Attorney's Office for the Northern District of Georgia.
At the end of 2017, alarm bells rang when four senior managers – chief financial officer John Gamble, president of US information solutions Joseph Loughran, president of workforce solutions Rodolfo Ploder, and senior veep of investor relations Douglas Brandberg – sold off company stock worth a total of about $1.8m.
However, they were cleared of insider dealing by a panel of three directors from other firms. ®