Credit bureau Equifax announced earlier this month that it discovered a data breach in July leaving 143 million Americans’ data vulnerable to identity theft. Equifax has been roundly criticized for its handling of this data breach, and now top executives are subject to a criminal probe resulting from their response: alleged insider trading.
Moody’s Investors Service predicted the breach would impede Equifax’s growth over the next several quarters and damage the company’s credibility as a custodian of customer data. Moreover, the company faces potential litigation, higher insurance premiums and potential regulatory action. All of which seems predictable in light of the nature and gravity of the hack.
Predictable enough that three Equifax executives dumped $1.8 million in stock in early August, after the data breach was known but before it was made public in September.
The stock sales in question involve Equifax Chief Financial Officer John Gamble, President of U.S. Information Solutions Joseph Loughran and President of Workforce Solutions Rodolfo Ploder.
This divestment of Equifax stock based on confidential and catastrophic knowledge is the prime example of insider trading according to the Securities and Exchange Commission, which cites criminal insider trading as, for example “corporate officers, directors, and employees who traded the corporation’s securities after learning of significant, confidential corporate developments.”
The US Attorney’s office in Atlanta, where Equifax is based, launched an investigation into the trades in question.
Thirty-six lawmakers in Congress, including Senators Jack Reed (D-Rhode Island) and John Kennedy (R-Louisiana) have also called for investigation into these trades, both by the Department of Justice and the Securities and Exchange Commission.
“We request that you conduct a thorough examination of any unusual trading, including any atypical options trading, for violations of insider trading law,” the lawmakers said in a letter. “We request that you spare no effort in your investigations and in enforcing the law to the fullest extent against anyone who is found to be at fault.”
The House Energy and Commerce Committee also sent a letter to Equifax CEO Richard Smith requesting he testify before the subcommittee on digital commerce and consumer protection October 3.
Equifax has stated it’s executives were not aware of the breach when they sold nearly $2 million in company stock.
Katelyn Kivel is a journalist and political scientist from Kalamazoo, Michigan who has specialized in law, policy and government reporting over the course of her career. Follow her on Twitter @katelynkivel.