8 ms·

It is good that someone is being charged, but it would be nice if it was someone more senior. They always make the little guy take the fall. Avoiding $117,000

by craigc 9y ago

It is good that someone is being charged, but it would be nice if it was someone more senior. They always make the little guy take the fall. Avoiding $117,000 losses on $1 million is nothing compared to what some people get away with. The CEO, meanwhile, walked away with up to $90 million: http://fortune.com/2017/09/26/equifax-ceo-richard-smith-net-worth/ http://fortune.com/2017/09/26/equifax-ceo-richard-smith-net-... The other executives were “not aware” when they sold their shares: > Equifax, the credit report company hacked over the summer exposing the personal information of 145 million Americans, said a special committee has determined that none of the four executives who sold shares at the time did anything wrong. > The high-level executives sold shares worth a combined $1.8 million in the days immediately after the company discovered the breach. That is a pretty remarkable coincidence if you ask me. https://www.mercurynews.com/2017/11/03/equifax-4-executives-didnt-commit-insider-trading/ https://www.mercurynews.com/2017/11/03/equifax-4-executives-... -- For reference, the CEO of Intel sold $25 million worth of stock after hearing about the Meltdown and Spectre vulnerabilities before they were disclosed to the public, and he will probably be fine.

ISL 9y ago
It is the shareholders of Equifax who must take fall for the breach, for it is they who own and are responsible for the company. Many of us own, through index funds, a small amount of Equifax.
- s73v3r_ 9y ago
  While I have no love lost for the shareholders of an evil company like that, I think that's the wrong attitude to take. As you pointed out, most shareholders aren't in any kind of a position to actually exercise any control over the company. I'd still put this on the executives. They're paid the big bucks to be responsible for the company. Yet, it seems that more and more, we're looking for ways to continue paying them the big bucks, but remove that responsibility. All carrot and no stick, as it were.
JumpCrisscross 9y ago
> They always make the little guy take the fall Taking the fall means "to bear the blame or punishment for another person's failure or misdeed" [1]. Ying is being charged with his own crimes alone. Furthermore, we have no evidence about whether (a) the other executives actually committed a violation, (b) Ying is the only one who left a prosecutable paper trail or (c) Ying will take a plea deal and co-operate against the others. [1] https://en.wiktionary.org/wiki/take_the_fall https://en.wiktionary.org/wiki/take_the_fall
- craigc 9y ago
  You are right. I am not stating a fact. It is my opinion that this guy is being used as a sacrificial lamb because I have seen things like this happen time and time again. Also seems like a pretty big coincidence that the others sold off their shares immediately after hearing about the breach, but it was unrelated.
  - JumpCrisscross 9y ago
    > but it was unrelated That has not yet been concluded. This could be the first move in a series of charges. That or Ying was uniquely stupid. He texted his direct report “on the phone with [global CIO]. Sounds bad. We may be the one breached. . . . Starting to put 2 and 2 together" [1] before exercising "all of his vested options to buy Equifax shares, and then immediately [selling] those Equifax shares for total proceeds of more than $950,000" (§ 49) an hour after searching for "(1) 'Experian breach'; (2) 'Experian stock price 9/15/2015'; and (3) 'Experian breach 2015'" on the Internet (§ 42). [1] https://www.sec.gov/litigation/complaints/2018/comp-pr2018-40.pdf https://www.sec.gov/litigation/complaints/2018/comp-pr2018-4... § 31
- mcny 9y ago
  It really is NOT. From what I've read prosecutors care a lot about their "success rate". I think the consensus here is Equifax hired this guy to take the blame pretty much. That's why we call him the fall guy. Look at Wells Fargo. Or even HSBC. Apparently, even Toyota tried to cover up its sticky accelerator? Don't forget about VW. I think when something like this happens the CEO and the board must go to prison even if there is no direct evidence. You must take responsibility for the actions of your reports. I can't see things improving any other way.
seanmcdirmid 9y ago
Don’t most C-level execs typically trade on a preset schedule to avoid insider trading allegations? In fact, I’m pretty sure that’s why you never here about them insider trading their own stock.
- deleted 9y ago
  [deleted]
- snuxoll 9y ago
  Yes, they do - the problem is when they schedule sales after being made aware of insider information but before it is released to the public. Obviously a CEO will have knowledge of some things that won't me made public during a scheduled stock sale, like upcoming product roadmaps that may not be released yet, etc. It's impossible to completely avoid this, but scheduling a sale after a breach or major security vulnerability in your products is discovered and well before public disclosure is not okay. I'm glad this Equifax exec got what he deserved, Krzanich should get the same treatment.
- zeth___ 9y ago
  Yes and no. >After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. The SEC stated that, despite the fact that 10b5-1(c) requires trades to be irrevocable, there can be no liability for insider trading under Rule 10b-5 without an actual securities transaction, based on the U.S. Supreme Court's holding in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975).[0] Without knowing the 10b5-1 schedule you can't say if insider knowledge was used when executing the plan. The simplest and dumbest version of this would be unique individual sale plans for each share you own for every day of the year. You just cancel the ones you don't want to sell, until you do, and everything is legal. [0] https://en.wikipedia.org/wiki/SEC_Rule_10b5-1#A_possible_loophole:_canceling_plans https://en.wikipedia.org/wiki/SEC_Rule_10b5-1#A_possible_loo...
  - rembling 9y ago
    Wow! Sounds like a loop hole to me.
slavik81 9y ago
The SEC complaint linked at the bottom of that page[1] literally has a minute-by-minute account of how the CIO of Equifax's US information systems business unit was told there had been a major incident, started Googling about the stock market's reaction to a previous breach at Experian in 2015, and then an hour later sold all his shares for $950,000. Maybe the CEO broke the law too, but the CIO left a clear trail of evidence. He is neither a little guy nor a fall guy. [1]: https://www.sec.gov/litigation/complaints/2018/comp-pr2018-40.pdf https://www.sec.gov/litigation/complaints/2018/comp-pr2018-4...
- joering2 9y ago
  These days Google hands out your info to LE like its a street candy; it wasn't like this back in a day when I was a Noogler at least they had whole team looking at every single LE request; these days, I bet its just a blanket [select all], [accept]. Just another reason to switch to DuckDuck go, whether you are doing something shady or not.
  - ytpete 9y ago
    Are you sure the information about his search history came from Google, as opposed to IT network logs or forensic examination of his computer? The complaint makes reference to "Ying’s internet browsing history" which sounds more likely to be one of the latter...
  - slavik81 9y ago
    The complaint doesn't actually say what search engine he used. Sorry, I probably shouldn't have used "googling" interchangeably with "searching".
  - s73v3r_ 9y ago
    Or, and hear me out on this, maybe, just maybe, don't do shady things? This guy didn't get in trouble because he used Google. He got in trouble because he was breaking the law.
- ethbro 9y ago
  It's always amazed me that the SEC standard is proving insider trading willfully took place. Which is a pretty high bar. How about... If we can prove you knew about it, we convict you. If we can't prove you knew about it, but your transactions appear to be insider trading to a jury, then you have to zero out the transactions (either by repurchasing equivalent stock or some other method). You don't get charged, but there's no "getting away with it" either.
pmiller2 9y ago
And yet, nobody's going to jail for the breach itself, and Equifax is probably going to avoid any penalties whatsoever. I'd like to see someone held responsible for mishandling the personal financial information of millions of Americans.
- icebraining 9y ago
  Before people go to jail, you must make it a crime. Is it?
  - s73v3r_ 9y ago
    Criminal negligence is a thing. I would say that storing that much personal data about people, and not taking the efforts to secure it properly, should count.
paulie_a 9y ago
I could be wrong but didn't the Intel CEO have his stock sold on a schedule? The Intel debacle aside it did seem like a regular transaction that was not directly related to knowledge of the shit show that is spectre/meltdown
- Joakal 9y ago
  He sold more than the scheduled stock down to his bare minimum required to hold as the CEO. I gather that the loophole to insider trading is that if you sell 0.1% of your shares per month, then decide to sell 99% of it in one month. It's ok, because you were scheduled to sell shares anyway.
pforpineapple 9y ago
I totally agree with you. $117,000 is not even significant...
TheSpiceIsLife 9y ago
He’s being charged for the wrong thing, in my opinion. Who cares about the insider trading, that’s mostly a victimless crime. 145 million people had personal identity MG information leaked. Is anyone being charged for that? The CIO would seem like a relevant candidate.

by craigc 9y ago

ISL 9y ago

It is the shareholders of Equifax who must take fall for the breach, for it is they who own and are responsible for the company. Many of us own, through index funds, a small amount of Equifax.

s73v3r_ 9y ago
While I have no love lost for the shareholders of an evil company like that, I think that's the wrong attitude to take. As you pointed out, most shareholders aren't in any kind of a position to actually exercise any control over the company. I'd still put this on the executives. They're paid the big bucks to be responsible for the company. Yet, it seems that more and more, we're looking for ways to continue paying them the big bucks, but remove that responsibility. All carrot and no stick, as it were.

JumpCrisscross 9y ago

> They always make the little guy take the fall Taking the fall means "to bear the blame or punishment for another person's failure or misdeed" [1]. Ying is being charged with his own crimes alone. Furthermore, we have no evidence about whether (a) the other executives actually committed a violation, (b) Ying is the only one who left a prosecutable paper trail or (c) Ying will take a plea deal and co-operate against the others. [1] https://en.wiktionary.org/wiki/take_the_fall https://en.wiktionary.org/wiki/take_the_fall

craigc 9y ago
You are right. I am not stating a fact. It is my opinion that this guy is being used as a sacrificial lamb because I have seen things like this happen time and time again. Also seems like a pretty big coincidence that the others sold off their shares immediately after hearing about the breach, but it was unrelated.
- JumpCrisscross 9y ago
  > but it was unrelated That has not yet been concluded. This could be the first move in a series of charges. That or Ying was uniquely stupid. He texted his direct report “on the phone with [global CIO]. Sounds bad. We may be the one breached. . . . Starting to put 2 and 2 together" [1] before exercising "all of his vested options to buy Equifax shares, and then immediately [selling] those Equifax shares for total proceeds of more than $950,000" (§ 49) an hour after searching for "(1) 'Experian breach'; (2) 'Experian stock price 9/15/2015'; and (3) 'Experian breach 2015'" on the Internet (§ 42). [1] https://www.sec.gov/litigation/complaints/2018/comp-pr2018-40.pdf https://www.sec.gov/litigation/complaints/2018/comp-pr2018-4... § 31
mcny 9y ago
It really is NOT. From what I've read prosecutors care a lot about their "success rate". I think the consensus here is Equifax hired this guy to take the blame pretty much. That's why we call him the fall guy. Look at Wells Fargo. Or even HSBC. Apparently, even Toyota tried to cover up its sticky accelerator? Don't forget about VW. I think when something like this happens the CEO and the board must go to prison even if there is no direct evidence. You must take responsibility for the actions of your reports. I can't see things improving any other way.

seanmcdirmid 9y ago

Don’t most C-level execs typically trade on a preset schedule to avoid insider trading allegations? In fact, I’m pretty sure that’s why you never here about them insider trading their own stock.

deleted 9y ago
[deleted]
snuxoll 9y ago
Yes, they do - the problem is when they schedule sales after being made aware of insider information but before it is released to the public. Obviously a CEO will have knowledge of some things that won't me made public during a scheduled stock sale, like upcoming product roadmaps that may not be released yet, etc. It's impossible to completely avoid this, but scheduling a sale after a breach or major security vulnerability in your products is discovered and well before public disclosure is not okay. I'm glad this Equifax exec got what he deserved, Krzanich should get the same treatment.
zeth___ 9y ago
Yes and no. >After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. The SEC stated that, despite the fact that 10b5-1(c) requires trades to be irrevocable, there can be no liability for insider trading under Rule 10b-5 without an actual securities transaction, based on the U.S. Supreme Court's holding in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975).[0] Without knowing the 10b5-1 schedule you can't say if insider knowledge was used when executing the plan. The simplest and dumbest version of this would be unique individual sale plans for each share you own for every day of the year. You just cancel the ones you don't want to sell, until you do, and everything is legal. [0] https://en.wikipedia.org/wiki/SEC_Rule_10b5-1#A_possible_loophole:_canceling_plans https://en.wikipedia.org/wiki/SEC_Rule_10b5-1#A_possible_loo...
- rembling 9y ago
  Wow! Sounds like a loop hole to me.

slavik81 9y ago

The SEC complaint linked at the bottom of that page[1] literally has a minute-by-minute account of how the CIO of Equifax's US information systems business unit was told there had been a major incident, started Googling about the stock market's reaction to a previous breach at Experian in 2015, and then an hour later sold all his shares for $950,000. Maybe the CEO broke the law too, but the CIO left a clear trail of evidence. He is neither a little guy nor a fall guy. [1]: https://www.sec.gov/litigation/complaints/2018/comp-pr2018-40.pdf https://www.sec.gov/litigation/complaints/2018/comp-pr2018-4...

joering2 9y ago
These days Google hands out your info to LE like its a street candy; it wasn't like this back in a day when I was a Noogler at least they had whole team looking at every single LE request; these days, I bet its just a blanket [select all], [accept]. Just another reason to switch to DuckDuck go, whether you are doing something shady or not.
- ytpete 9y ago
  Are you sure the information about his search history came from Google, as opposed to IT network logs or forensic examination of his computer? The complaint makes reference to "Ying’s internet browsing history" which sounds more likely to be one of the latter...
- slavik81 9y ago
  The complaint doesn't actually say what search engine he used. Sorry, I probably shouldn't have used "googling" interchangeably with "searching".
- s73v3r_ 9y ago
  Or, and hear me out on this, maybe, just maybe, don't do shady things? This guy didn't get in trouble because he used Google. He got in trouble because he was breaking the law.
ethbro 9y ago
It's always amazed me that the SEC standard is proving insider trading willfully took place. Which is a pretty high bar. How about... If we can prove you knew about it, we convict you. If we can't prove you knew about it, but your transactions appear to be insider trading to a jury, then you have to zero out the transactions (either by repurchasing equivalent stock or some other method). You don't get charged, but there's no "getting away with it" either.

pmiller2 9y ago

And yet, nobody's going to jail for the breach itself, and Equifax is probably going to avoid any penalties whatsoever. I'd like to see someone held responsible for mishandling the personal financial information of millions of Americans.

icebraining 9y ago
Before people go to jail, you must make it a crime. Is it?
- s73v3r_ 9y ago
  Criminal negligence is a thing. I would say that storing that much personal data about people, and not taking the efforts to secure it properly, should count.

paulie_a 9y ago

I could be wrong but didn't the Intel CEO have his stock sold on a schedule? The Intel debacle aside it did seem like a regular transaction that was not directly related to knowledge of the shit show that is spectre/meltdown

Joakal 9y ago
He sold more than the scheduled stock down to his bare minimum required to hold as the CEO. I gather that the loophole to insider trading is that if you sell 0.1% of your shares per month, then decide to sell 99% of it in one month. It's ok, because you were scheduled to sell shares anyway.

pforpineapple 9y ago

I totally agree with you. $117,000 is not even significant...

TheSpiceIsLife 9y ago

He’s being charged for the wrong thing, in my opinion. Who cares about the insider trading, that’s mostly a victimless crime. 145 million people had personal identity MG information leaked. Is anyone being charged for that? The CIO would seem like a relevant candidate.