Former Equifax executive charged with insider trading before hack disclosure
A former Equifax Inc. executive has been charged with insider trading after he allegedly sold shares in the troubled consumer credit reporting agency after learning of its hacking but before the information was released publicly.
The charges were the first brought following an investigation launched by the U.S. Department of Justice in September. They accuse former Senior Vice President Jun Ying (pictured), described by the Securities and Exchange Commission as being the “next in line to be the company’s global CIO,” of exercising all of his vested Equifax stock options and then selling the shares prior to public disclosure of the hacking.
The SEC claims that Ying reaped proceeds of nearly $1 million and avoided a loss of $117,000 by selling his shares before the public disclosure of the hack.
“As alleged in our complaint, 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,” said Richard R. Best, director of the SEC’s Atlanta Regional Office. “Corporate insiders who learn inside information, including information about material cyber intrusions, cannot betray shareholders for their own financial benefit.”
News that Equifax had been hacked, with more than 100 million customer records stolen, first emerged in September. Although the initial number of records stolen was believed to have been 143 million, the company confessed that the total number was actually 145.3 million March 1.
The company’s handling of the hacking has been highly criticized by observers from Day One, not only because Equifax knowingly sat on the details of the hack, hence the insider trading charges, but also in how it managed the fallout. Highlights of Equifax’s dubious response to the hack include its directing customers to a fake security website Sept. 20 and then serving customers malware-infected fake Flash plugins in October.
The SEC said it has charged Ying with violating the antifraud provisions of the federal securities laws and that it is seeking disgorgement of ill-gotten gains plus interest, penalties and injunctive relief.
Photo: HMG Strategy/Jun Ying
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