A former Equifax executive has been charged with insider trading after he sold almost $1 million in stock before the data breach at the company was publicly disclosed.
Jun Ying, who was Equifax’s US chief information officer (CIO) at the time the company was hacked last year, faces criminal charges filed by the US Attorney’s Office for the Northern District of Georgia and anti-fraud civil charges filed by the US Securities and Exchange Commission.
According to the SEC, Ying sold nearly $1m in shares just 10 days before Equifax announced that hackers had broken into its systems.
In late August, according to the complaint, Ying started to realise that the company had fallen victim to a major breach. After a call with a high-ranking executive, Ying texted a colleague saying: “Sounds bad. We may be the one breached. … Starting to put two and two together.”
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
Ying, who seemingly didn’t even try to cover his tracks, then looked online to see how a major hack on Experian, one of Equifax’s competitors, had affected the company’s stock price.
Within an hour of discovering how Experian’s stock price had suffered after a much smaller hack, Ying exercised all of his vested Equifax stock options and sold those shares for $950,000.
According to the SEC, he would have made $117,000 less if he had sold those shares after the breach was made public.
“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 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.”
The SEC is calling for Ying pay back the money, plus interest, that he saved by selling the shares before the disclosure, along with a judgement prohibiting him from being employed as an officer or director of a publicly traded company.
Ying is not the only executive who has faced scrutiny for selling shares ahead of the Equifax’s public disclosure of the breach.
Three other top executives, including its chief financial officer, president of workforce solutions, and president of US information solutions, also dumped hundreds of thousands of dollars in shares just days before the firm went public with the breach.
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