The U.S. Justice Department is said to be investigating the questionable sale of stock by Equifax executives in advance of the company's public announcement of its massive data breach. The investigation is said to include U.S. prosecutors in Atlanta, the FBI and the Securities and Exchange Commission, according to a report this morning from Bloomberg.
Three executives, Chief Financial Officer and Corporate VP John Gamble, President of U.S. Information Solutions Joseph Loughran and President of Workforce Solutions Rodolfo Ploder all sold substantive amounts of Equifax stock between the time the company learned of the hack and the date the hack was publicly announced. These trades, amounting to $1.8 million, saved the three executives from feeling the financial sting of the announcements.
Equifax stock has plummeted in the days since 143 million people learned that their Social Security numbers and driver license information was put in jeopardy by the company that failed to patch a known bug.
Equifax told us on September 7 that, "The three executives who sold a small percentage of their Equifax shares on Tuesday, August 1, and Wednesday, August 2, had no knowledge that an intrusion had occurred at the time they sold their shares.”
While it is possible that the executives were not made aware of the breach before they sold their shares, it would be an almost unbelievable coincidence. A breach of the size faced by Equifax would have almost certainly been top of mind of every individual at the company, particularly key executives. To make matters worse, these trades were not pre-scheduled before the hack.
If the executives were aware of the hack in advance of the public and traded on that information, they would have violated insider trading laws. And beyond even the law, profiting on the back of potential negligence is pretty disgusting.
Members of the U.S. Senate and House have been putting pressure on Equifax to explain the trades in question. The pressure from both inside and outside the government seems to have culminated in a formal investigation.
We are reaching out to Equifax and the U.S. Justice Department for comment and will update this post if we hear back.