6 ms·

Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

115 points by ColinFCodeChef 9y ago

m3kw9 9y ago
Not having clicked thru the link, that doesn’t sound good for his insider trading case
- razwall 9y ago
  The article is about the insider trading charges that were filed against him today, so yeah.
deleted 9y ago
[deleted]
cjbprime 9y ago
I wonder if this is a step on the way to going after the CEO too.
- breitling 9y ago
  According to this article, apparently, the other executives hadn't been "informed of the breach" when they sold their stocks. My bullshit detector is going off the charts.
  - newbie912 9y ago
    No kidding. He wasn't told either, but easily figured it out. The rest of the executives should by charged with insider trading if they knew, or fired for incompetence if they were unable to figure it out.
sgroppino 9y ago
Appalling. One would have thought that a C-level officer in a listed company would know enough about insider trading as to not do it...
- sdhgaiojfsa 9y ago
  What's mind-boggling to me about this is to take such a risk over such a paltry (for a C-level) amount of money.
- deleted 9y ago
  [deleted]
- ams6110 9y ago
  Those are pretty much the same people who know enough insider info to even be in a position to trade on it.... When there's insider trading happening, it's almost always a C-Level person or someone closely connected to him.
- googlryas 9y ago
  The company was intentionally keeping him in the dark about the matters, and he put things together. Is that really insider trading?
  - gknoy 9y ago
    Insider trading requires inside _knowledge_. Deducing it oneself is not a defense. Just like classified information, it doesn't matter how you got it, it matters what you do with it.
    - googlryas 9y ago
      At what point does the deducing it yourself become allowable(if ever)? If I work at Amazon, and see Bezos in a conference room banging his hands on a desk and raging(which is not his normal behavior at all), I sell AMZN based on that, and then it turns out they had a massive data breach that tanks the stock price, is that insider trading?
- pishpash 9y ago
  On the other hand, we simply accept insider trading as one of the perks of Congress.
kyrra 9y ago
Dupe of https://news.ycombinator.com/item?id=16584980 https://news.ycombinator.com/item?id=16584980
rdtsc 9y ago
> Ying was invited to a mandatory conference call. While he didn’t initially join the call, one of his direct reports did, the SEC said. He was trying to sell his stock and didn't wait an official trail of him knowing about it. It would be hard to deny knowing about it once he joined the conference call. Did I read that right? Because that's what it sounds like to me. > “VERY large breach opportunity” "opportunity" what does that even mean? Were they celebrating and planning on monetizing it? That kind of makes sense I guess. Since they get to charge people to freeze their credit, their stock has recovered and executive retired happily to Bahamas or wherever. It was an opportunity after all!
- withinrafael 9y ago
  Per the complaint, with my notes in brackets: Project Sparta [breach tooling team] was kept separate from Project Sierra [breach action team] to limit the number of people who knew that Equifax itself had been breached. Those Equifax employees who were only part of Project Sparta were not told that Equifax had been breached, but were instead told that they were working for an unnamed client that had experienced a large data breach [...] https://www.sec.gov/litigation/complaints/2018/comp-pr2018-40.pdf https://www.sec.gov/litigation/complaints/2018/comp-pr2018-4...
  - googlryas 9y ago
    I suppose the firewalls between Project Sparta, Sierra, and the rest of the company explain why the 'equifaxsecurity2017.com' or whatever it was called website was a completely separate thing and not part of equifax.com
    - newbie912 9y ago
      No, that was public relations 101. Equifax the company and their domain can move past the beach without dragging along the baggage that's attached to that quasi-random, only ever so slightly connected domain. Mitigation playbook page 1, baby!
- deleted 9y ago
  [deleted]
rossdavidh 9y ago
"Three Equifax Inc. senior executives -- Chief Financial Officer John Gamble, and unit presidents Joseph Loughran and Rodolfo Ploder -- sold shares worth almost $1.8 million in the days after the company discovered the breach. Equifax has said those three executives had not been informed of the incident when they initiated the sales." While I'm not sympathetic to the U.S. CIO named in this article, I find it somewhat dubious that none of the above executives knew anything. In any event, I wouldn't take Equifax's word for it. The finance dudes get a clean bill of health, and the tech guy gets thrown to the feds. Again, not that Ying deserves my sympathy either, but...
- 21 9y ago
  > The finance dudes get a clean bill of health, and the tech guy gets thrown to the feds. Maybe the finance dudes are not so retarded to sell their stock immediately after one of the biggest data leaks in history with no ahead of time sell plan, and after googling what was the impact on the stock price of another data leak. Pretty bad op-sec for a tech guy. Or maybe he's just financially clueless, and doesn't know the the reason this doesn't happen more often (executives selling after really bad news) is exactly because the SEC it's doing a good job policing it and finance guys know that you need a SEC-proof alibi for any sell. The reason that many stocks drop sharply 5-10% after some company news releases after being relatively flat is exactly because executives are scared shit-less of selling or leaking the info before that news is public.
  - Coding_Cat 9y ago
    Maybe the finance guy noticed the CIO putting in a huge sell option and figured "he might know something, better join in" and this caused the others to follow suit.
    - bigtunacan 9y ago
      That would still constitute insider trading.
  - humanjvm 9y ago
icedchai 9y ago
What would’ve happened if this guy just bought some puts in a regular brokerage account?
- jarsin 9y ago
  That's just more crimes added to the one he already committed. Failure to disclose, conspiracy etc.
- pishpash 9y ago
  What he should have done is to get his fifth cousin in China to buy some Experian and TransUnion stock, then share the profit with him through bitcoin two years later.
intopieces 9y ago
If insider trading laws didn't exist, would we have known that something was wrong more quickly? Are high-volume trades from executives public? It seems to me that insider trading laws mean people take every step to keep bad things about a company secret, which is not good for consumers.
- googlryas 9y ago
  It's not about keeping bad things about a company secret - it is about letting the world of investors know at the same time important information.
  - ThrustVectoring 9y ago
    That's not the point of insider trading laws. The point is to prevent misappropriation of insider knowledge that you acquire as a course of fulfilling your job responsibilities. If you have material information about a company that others don't, you're more than welcome to trade based on it. The profit incentivizes accurately pricing securities. If you know that some other company is concealing massive fraud, feel free to short the daylights out of it and write an exposé.
- NaturallyMade 9y ago
  All executive (officer) trades are public. You can typically find it on a companies investor relations website.
gene91 9y ago
If you guessed that your employer may be in trouble and then sold stock, is that considered insider trading? Let's say, you are in charge of security. The CEO is never interested in your work. One day, you got an invitation to meet with the CEO. You sold all your stock before you go to the meeting (based on a guess that something bad might have happened). Is that illegal? Is the meeting invite considered material non public information?
- crispyporkbites 9y ago
  Can you prove whether you guessed or knew something only an insider would have known?
- tlrobinson 9y ago
  I'm not a lawyer, but I expect that would depend on if you were aware of non-public information that could affect that decision.
- lowdest 9y ago
  The SEC has rules for what constitutes legal and illegal insider trading: https://www.sec.gov/fast-answers/answersinsiderhtm.html https://www.sec.gov/fast-answers/answersinsiderhtm.html Generally though, the rules don't disallow average employees from guessing about the future stock price. It becomes illegal insider trading if somehow you had obtained material non-public information to make the decision.
- sokoloff 9y ago
  The mere fact of meeting invite, standing alone (no other information that you had, innocuous subject line, etc), would be non-public, but would probably not be found to be material. However, if you're the Equifax CSO and the CEO is never interested in your work, you might want to sell your shares as soon as they vest anyway.
lsh123 9y ago
"Prosecutors say he searched on the internet for what might happen to Equifax stock when the news of the attack broke" 1) CIO should probably know the answer w/o searching. 2) CIO should probably know how to search w/o leaving evidence trail (incognito mode in a coffee shop on personal laptop for starters).
paul7986 9y ago
Equifax is still around? :-(

m3kw9 9y ago

Not having clicked thru the link, that doesn’t sound good for his insider trading case

razwall 9y ago
The article is about the insider trading charges that were filed against him today, so yeah.

deleted 9y ago

[deleted]

cjbprime 9y ago

I wonder if this is a step on the way to going after the CEO too.

breitling 9y ago
According to this article, apparently, the other executives hadn't been "informed of the breach" when they sold their stocks. My bullshit detector is going off the charts.
- newbie912 9y ago
  No kidding. He wasn't told either, but easily figured it out. The rest of the executives should by charged with insider trading if they knew, or fired for incompetence if they were unable to figure it out.

sgroppino 9y ago

Appalling. One would have thought that a C-level officer in a listed company would know enough about insider trading as to not do it...

sdhgaiojfsa 9y ago
What's mind-boggling to me about this is to take such a risk over such a paltry (for a C-level) amount of money.
deleted 9y ago
[deleted]
ams6110 9y ago
Those are pretty much the same people who know enough insider info to even be in a position to trade on it.... When there's insider trading happening, it's almost always a C-Level person or someone closely connected to him.
googlryas 9y ago
The company was intentionally keeping him in the dark about the matters, and he put things together. Is that really insider trading?
- gknoy 9y ago
  Insider trading requires inside _knowledge_. Deducing it oneself is not a defense. Just like classified information, it doesn't matter how you got it, it matters what you do with it.
  - googlryas 9y ago
    At what point does the deducing it yourself become allowable(if ever)? If I work at Amazon, and see Bezos in a conference room banging his hands on a desk and raging(which is not his normal behavior at all), I sell AMZN based on that, and then it turns out they had a massive data breach that tanks the stock price, is that insider trading?
pishpash 9y ago
On the other hand, we simply accept insider trading as one of the perks of Congress.

kyrra 9y ago

Dupe of https://news.ycombinator.com/item?id=16584980 https://news.ycombinator.com/item?id=16584980

rdtsc 9y ago

> Ying was invited to a mandatory conference call. While he didn’t initially join the call, one of his direct reports did, the SEC said. He was trying to sell his stock and didn't wait an official trail of him knowing about it. It would be hard to deny knowing about it once he joined the conference call. Did I read that right? Because that's what it sounds like to me. > “VERY large breach opportunity” "opportunity" what does that even mean? Were they celebrating and planning on monetizing it? That kind of makes sense I guess. Since they get to charge people to freeze their credit, their stock has recovered and executive retired happily to Bahamas or wherever. It was an opportunity after all!

withinrafael 9y ago
Per the complaint, with my notes in brackets: Project Sparta [breach tooling team] was kept separate from Project Sierra [breach action team] to limit the number of people who knew that Equifax itself had been breached. Those Equifax employees who were only part of Project Sparta were not told that Equifax had been breached, but were instead told that they were working for an unnamed client that had experienced a large data breach [...] https://www.sec.gov/litigation/complaints/2018/comp-pr2018-40.pdf https://www.sec.gov/litigation/complaints/2018/comp-pr2018-4...
- googlryas 9y ago
  I suppose the firewalls between Project Sparta, Sierra, and the rest of the company explain why the 'equifaxsecurity2017.com' or whatever it was called website was a completely separate thing and not part of equifax.com
  - newbie912 9y ago
    No, that was public relations 101. Equifax the company and their domain can move past the beach without dragging along the baggage that's attached to that quasi-random, only ever so slightly connected domain. Mitigation playbook page 1, baby!
deleted 9y ago
[deleted]

rossdavidh 9y ago

"Three Equifax Inc. senior executives -- Chief Financial Officer John Gamble, and unit presidents Joseph Loughran and Rodolfo Ploder -- sold shares worth almost $1.8 million in the days after the company discovered the breach. Equifax has said those three executives had not been informed of the incident when they initiated the sales." While I'm not sympathetic to the U.S. CIO named in this article, I find it somewhat dubious that none of the above executives knew anything. In any event, I wouldn't take Equifax's word for it. The finance dudes get a clean bill of health, and the tech guy gets thrown to the feds. Again, not that Ying deserves my sympathy either, but...

21 9y ago
> The finance dudes get a clean bill of health, and the tech guy gets thrown to the feds. Maybe the finance dudes are not so retarded to sell their stock immediately after one of the biggest data leaks in history with no ahead of time sell plan, and after googling what was the impact on the stock price of another data leak. Pretty bad op-sec for a tech guy. Or maybe he's just financially clueless, and doesn't know the the reason this doesn't happen more often (executives selling after really bad news) is exactly because the SEC it's doing a good job policing it and finance guys know that you need a SEC-proof alibi for any sell. The reason that many stocks drop sharply 5-10% after some company news releases after being relatively flat is exactly because executives are scared shit-less of selling or leaking the info before that news is public.
- Coding_Cat 9y ago
  Maybe the finance guy noticed the CIO putting in a huge sell option and figured "he might know something, better join in" and this caused the others to follow suit.
  - bigtunacan 9y ago
    That would still constitute insider trading.
- humanjvm 9y ago

icedchai 9y ago

What would’ve happened if this guy just bought some puts in a regular brokerage account?

jarsin 9y ago
That's just more crimes added to the one he already committed. Failure to disclose, conspiracy etc.
pishpash 9y ago
What he should have done is to get his fifth cousin in China to buy some Experian and TransUnion stock, then share the profit with him through bitcoin two years later.

intopieces 9y ago

If insider trading laws didn't exist, would we have known that something was wrong more quickly? Are high-volume trades from executives public? It seems to me that insider trading laws mean people take every step to keep bad things about a company secret, which is not good for consumers.

googlryas 9y ago
It's not about keeping bad things about a company secret - it is about letting the world of investors know at the same time important information.
- ThrustVectoring 9y ago
  That's not the point of insider trading laws. The point is to prevent misappropriation of insider knowledge that you acquire as a course of fulfilling your job responsibilities. If you have material information about a company that others don't, you're more than welcome to trade based on it. The profit incentivizes accurately pricing securities. If you know that some other company is concealing massive fraud, feel free to short the daylights out of it and write an exposé.
NaturallyMade 9y ago
All executive (officer) trades are public. You can typically find it on a companies investor relations website.

gene91 9y ago

If you guessed that your employer may be in trouble and then sold stock, is that considered insider trading? Let's say, you are in charge of security. The CEO is never interested in your work. One day, you got an invitation to meet with the CEO. You sold all your stock before you go to the meeting (based on a guess that something bad might have happened). Is that illegal? Is the meeting invite considered material non public information?

crispyporkbites 9y ago
Can you prove whether you guessed or knew something only an insider would have known?
tlrobinson 9y ago
I'm not a lawyer, but I expect that would depend on if you were aware of non-public information that could affect that decision.
lowdest 9y ago
The SEC has rules for what constitutes legal and illegal insider trading: https://www.sec.gov/fast-answers/answersinsiderhtm.html https://www.sec.gov/fast-answers/answersinsiderhtm.html Generally though, the rules don't disallow average employees from guessing about the future stock price. It becomes illegal insider trading if somehow you had obtained material non-public information to make the decision.
sokoloff 9y ago
The mere fact of meeting invite, standing alone (no other information that you had, innocuous subject line, etc), would be non-public, but would probably not be found to be material. However, if you're the Equifax CSO and the CEO is never interested in your work, you might want to sell your shares as soon as they vest anyway.

lsh123 9y ago

"Prosecutors say he searched on the internet for what might happen to Equifax stock when the news of the attack broke" 1) CIO should probably know the answer w/o searching. 2) CIO should probably know how to search w/o leaving evidence trail (incognito mode in a coffee shop on personal laptop for starters).

paul7986 9y ago

Equifax is still around? :-(