The Securities and Exchange Commission today charged a former chief information officer of a USA business unit of Equifax with insider trading in advance of the company's September 2017 announcement about a massive data breach that exposed the social security numbers and other personal information of about 148 million us customers.
According to the SEC, Jun Ying, who was chief information officer of one of the company's USA businesses at the time "allegedly used confidential information entrusted to him by the company to conclude that Equifax had suffered a serious breach" in late August.
The SEC noted that at the time of the breach, Ying was often entrusted with nonpublic company information and was a leading candidate to become the global CIO of Equifax, a job he was in fact offered on September 15, the same day the company announced CIO Dave Webb would retire.
Ying netted almost $1 million and avoided more than $117,000 in losses, according to the SEC in a separate news release.
The U.S. Attorney's Office has also announced parallel criminal charges against Ying.
It is the first time that the USA government has pursued insider trading charges against somebody accused of profiting from information about a cyber attack, said David Axelrod, a former SEC trial attorney who is a partner at law firm Ballard Spahr. The search terms used by Ying were: (1) "Experian breach"; (2) "Experian stock price 9/15/2015"; and (3) "Experian breach 2015".
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Over the next few hours, Ying allegedly received numerous additional indications that Equifax was the company hit by the breach he and his team were responding to.
He then allegedly sold those Equifax shares for total proceeds of more than $950,000. He sold $1 million in shares and avoided a potential loss of $117,000. It wasn't until September 7 that Equifax publicly announced the breach which led to the stock falling.
A federal grand jury on Tuesday indicted Jun Ying, 42, the former chief information officer of Equifax's U.S. Information Solutions, part of the Atlanta-based credit reporting company.
Equifax's interim chief executive said in a statement that Ying left the company after it reviewed Ying's trading activity and concluded he had violated its trading policies.
Ying wasn't the only employee who sold shares, resulting in several execs getting accused of insider trading. "We are fully cooperating with the DOJ and the SEC, and will continue to do so".