Equifax Officials Under Justice Department Investigation For Insider Trading
By Ryan Velez
We’ve written in the past regarding the massive security breach from credit company Equifax and how the fallout is impacting the company, the industry, and potentially you. Now, Mother Jones reports that in a reversal of previous thoughts, three top executives of the company are under investigation from the Justice Department for insider trading, after unloading stock before the breach went public. This breach potentially revealed information including Social Security numbers, dates of birth, and credit card numbers for up to 143 million people.
In an emailed response to Mother Jones, U.S. Attorney John Horn said: “The US Attorney’s Office for the Northern District of Georgia is working with the FBI to conduct a criminal investigation into the Equifax breach and resulting theft of personal information.” The Justice Department’s Atlanta division declined to comment on whether the three Equifax officials are the subject of an insider trading probe.”
As you may recall from our previous coverage of this unfolding situation, it was originally stated by the company that the executives in question had no knowledge of the breach prior to selling the stock. Here is the exact nature of the statement as we wrote in a previous article:
“According to an official statement from the company, the executives had not been informed of the incident at the time the breach was discovered. The three “sold a small percentage of their Equifax shares,” Ines Gutzmer, a spokeswoman for the Atlanta-based company, said in an emailed statement. They “had no knowledge that an intrusion had occurred at the time.”
Regulatory filings show that on Aug. 1, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of the filings list the transactions as being part of 10b5-1 scheduled trading plans. This is roughly 13% of Gamble’s share, 9% of Loughran’s, and 4% of Ploder’s.
“I don’t know how the board will allow these executives to continue in their positions,” said Bart Friedman, a senior counsel at Cahill Gordon & Reindel LLP, who advises boards on matters including corporate compliance and enforcement challenges. “Yes, they should have a careful investigation and have an independent law firm interview the executives and review their emails and determine what they knew and when, but the end result is likely clear."