A former Equifax manager is facing civil and criminal charges for dumping stock prior to the company’s announcement of a data breach that exposed the data of more than 148 million American consumers to hackers.
Both the Securities and Exchange Commission and federal prosecutors in an Atlanta court allege that Sudhakar Reddy Bonthu traded on confidential information he received while creating a website for consumers impacted by the data breach.
According to the filing, Bonthu, who worked as a software engineering manager for the embattled credit agency, committed securities fraud by engaging in illegal insider trading in the securities of Equifax.
From the filing:
In late August 2017, after being entrusted by his employer with material nonpublic information about a massive cyber-intrusion and data breach purportedly suffered by an unnamed client of the company, Bonthu deduced that Equifax was itself the victim of the breach. Bonthu then traded against the company by purchasing risky put option contracts in Equifax common stock.
The filing also states that on September 8, 2017, the day after Equifax publicly announced that it had suffered a massive data breach, Bonthu sold all of his Equifax put options for a profit of more than $75,000.
Bonthu is now the second Equifax employee to be charged with dumping stock ahead of the data breach announcement. In March, the company’s former chief information officer of its U.S. information solutions business, Jun Ying, was charged with insider trading.
The filing also states that Bonthu refused to cooperate with an internal investigation into whether he had violated the company’s insider trading policy and was fired on March 12th of this year, two days before Ying was charged with insider trading.
Bonthu and Yin are not the only Equifax execs accused of insider trading following the data breach.
In the wake of the breach first being exposed, 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.
This news isn't exactly the icing on the cake this week for Equifax. On Wednesday, the New York Department of Financial Services announced the credit reporting agency signed a consent order with eight state banking commissioners in which it promised to undertake risk assessment and receive board oversight on its information security program, audit, information technology operations and vendor management, among other things.