Four Equifax executives were not aware of the massive data breach at the credit reporting agency when they sold off more than $1.5 million in company stock before the breach became public knowledge, the company said Friday.
In the wake of the breach that exposed the personal information of 145.5 million consumers to hackers, questions were raised about the stock trades of four company executives – John Gamble, chief financial officer; Joseph Loughran, president, U.S. information solutions; Rodolfo Ploder, president, workforce solutions; and Douglas Brandberg, senior vice president, investor relations.
The executives made the trades in a period between when the breach took place and when Equifax disclosed it to the public.
At issue was whether the executives knew about the breach before selling of some of their stock, thereby engaging in insider trading, a question that more than third of the members of the Senate asked the Securities and Exchange Commission, the Department of Justice, and the Federal Trade Commission to investigate.
The credit reporting agency launched its own investigation into the trades and found that none of the execs were aware of the breach when the made the trades in question.
The company released the results of its investigation on Friday.
To review the insider trading questions, the company said that it formed a special committee, conducted an “extensive review” of documents and communications during the period surrounding the four officers' trading in Equifax securities.
Included in that document review was the examination of more than 55,000 documents, including emails, text messages, phone logs, and other records, the company said.
The special committee also conducted “dozens” of interviews with individuals that were involved in or had knowledge of the breach investigation, along with those who needed to clear the trades before they took place. The committee also conducted “lengthy” in-person interviews with each of the four senior officers who executed the trades in question.
According to Equifax, the committee’s investigation determined that “none of the four executives had knowledge of the incident when their trades were made, that preclearance for the four trades was appropriately obtained, that each of the four trades at issue comported with company policy, and that none of the four executives engaged in insider trading.”
To determine whether any of the execs engaged in insider trading, the committee reviewed all of the execs’ Equifax emails, texts, calendars, voicemails, phone logs, and electronic documents, along with all Equifax emails and texts of each of their administrative assistants, for the period of July 29 through Aug. 2, 2017.
Equifax first discovered the breach on July 29th, and each of the four execs’ stock trades were conducted on either August 1st or August 2nd.
But, according to the investigation, each of the executives were not made aware of the breach until days or weeks later.
According to the company, Equifax has an insider trading policy that applies to all employees. Under that policy, no employee may trade in Equifax securities if he or she possesses “material non-public information” about the company.
Additionally, Equifax directors and certain senior Equifax officers may trade in Equifax securities only in specified “trading windows” and only if they first receive preclearance by the Equifax chief legal officer or his designee.
In each instance, it appears to be a case of unfortunate timing wherein the period for stock trades opened up just as the breach was being discovered and the trades in question were then executed before the company’s senior staff was notified.
“I’m grateful for the timely and thorough review by the special committee of this important matter. The board takes very seriously any allegation of insider trading,” Equifax Non-Executive Chairman Mark Feidler said.
“It is critically important for the public, our shareholders, our customers and our employees to know that we will not tolerate any violation of company policy or the law regarding the trading of securities,” Feidler added. “The conclusion that the company executives in question traded appropriately is an extremely important finding and very reassuring.”