The U.S. Justice Department has opened a criminal investigation into whether top officials at Equifax violated insider trading laws when they sold stock before the company disclosed that it had been hacked, according to people familiar with the investigation.
Equifax disclosed earlier this month that it discovered a security breach on July 29. The three executives sold shares worth almost $1.8 million in early August. The company has said the managers didn’t know of the breach at the time they sold the shares.
As we noted previously, Senator Heidi Heitkamp, a Democrat who sits on the Senate Banking Committee, said it was “disturbing” that it appeared executives sold their stock before disclosing material information to the public.
“If that happened, somebody needs to go to jail,” Heitkamp said at a credit union industry conference in Washington.
“It’s a problem when people can act with impunity with no consequences. How is that not insider trading?”
The total value of Equifax shares sold by Gamble, Ploder and Loughran 2 days after Equifax had discovered the data breach and 37 days before the company informed the public about the breach is $1.88 million.
In a statement, while admitting that the three executives had sold a “small percentage” of their shares, Equifax insists the executives “had no knowledge that an intrusion had occurred at the time they sold their shares.”
Bloomberg reports that the probe will be handled by the U.S. attorney’s office in Atlanta, where the credit firm’s headquarters is located, said one of the people.
A spokesman for the U.S. attorney’s office in Atlanta declined to comment.
As Simon Black previously raged, bear in mind, these “insider sales” have to be reported to the Securities and Exchange Commission, so there is a public record every time a company executive sells stock.
These executives would have known this, and that the public would find out they sold their stock right after the data breach was discovered.
This suggests to me that these guys are either complete idiots… or they simply don’t care… both of which seem par for the course at Equifax.
Moreover, given that the company is responsible for making the SEC filings, it’s obvious that Equifax knew about these executives selling their stock. Clearly they don’t care either.
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