Former Equifax Exec Charged with Insider Trading after Massive Data Breach

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Summary: A former high-ranking Equifax executive was charged with insider trading on Wednesday. 

The US Securities and Exchange Commission charged a former Equifax executive on Wednesday with insider trader. According to Business Insider, Jun Ying had allegedly unloaded company shares prior to the public disclosure of the massive data breach that affected millions of consumers.

  

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Ying, 42, was the next-in-line to be Equifax’s global chief information officer. The SEC alleged that he used his insider information about the company’s data breach to sell almost $1 million of stock so that he could avoid $117,000 in losses.

“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,” Richard R. Best, the director of the SEC’s Atlanta regional office, stated. “Corporate insiders who learn inside information, including information about material cyber intrusions, cannot betray shareholders for their own financial benefit.”

Last September, Equifax revealed that it experienced a data breach that affected almost 145 million US consumers’ personal information. The breach occurred between May and July, and it potentially allowed hackers access to millions of people’s personal information such as birth dates and social security numbers.

After that announcement, the SEC began an investigation into a few Equifax employees who sold millions of stock days after the company discovered the hacking. Three senior executives were named in that probe, but Ying was not a suspect at the time.

According to Wednesday’s complaint, Ying learned of the breach in a company email sent in August, and ten days later, he unloaded his shares. The email did not describe that the company had been breached specifically, but there was enough evidence for Ying to figure out what had happened.

“Ying only needed a few hours, however, to suspect his employer was the one that had been breached, prosecutors said. At 5:27 that afternoon, after speaking privately with the CIO of the main Equifax company, Ying allegedly sent a text message to one of his employees that read: “On the phone with [global CIO]. Sounds bad. We may be the one breached… Starting to put 2 and 2 together,”” Ars Technica wrote. 

Ying later received other indications that his company had been breached, and the following Monday, he performed web searches that hinted that he was interested in researching breaches and their stock impact. Hours after the search, he sold almost a million dollars of his company stock.

“These securities transactions were made on the basis of material nonpublic information and breached the duty of trust and confidence that Ying owed to Equifax and its shareholders,” prosecutors stated. “Ying knew or was reckless in not knowing that the information that Equifax itself was the victim of a major cybersecurity breach was material and nonpublic, and Ying used that information when making these securities transactions.”

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