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Former Equifax CIO sentenced for insider trading
- blitmap 7y agoDude "earned" ~1.5 million exercising his stock options and acting on insider knowledge. He gained $500k and sold before the stock fell. He has to pay back about $175k and go to jail for 4 months. Am I reading this right? Keep doing what you're doing, Ying.
- Zombieball 7y agoIf I was a CIO of a large company, I would not spend 4 months in jail just to gain $500k extra. Not worth it.
- StudentStuff 7y agoHe cashed out $1 million in shares not knowing if these shares would become near worthless shortly after selling them. Considering it was a $175k fine, he eliminated serious risk to his personal finances. Many rational people would do what this CIO did given this minor fine and brief prison sentence.
- raverbashing 7y ago"eliminated serious risk" that's textbook beancounter thinking What's the impact of this conviction in his future earnings?
- Zombieball 7y agoMaybe I am overestimating what he earned in a year. Tried a quick search to figure out what % of his take home income this was. I am not sure at what point I would start to consider 4 months in jail for insider trading “worth it” (again this was a plea deal, could’ve been higher). If all your personal wealth is tied up in a single company’s stock then you obviously run a risk of losing it all. The solution to that is diversifying your portfolio, not insider trading.
- Sebguer 7y agoTheir current CISO makes 3.9 million in total comp: https://www1.salary.com/Jamil-Farshchi-Salary-Bonus-Stock-Options-for-EQUIFAX-INC.html https://www1.salary.com/Jamil-Farshchi-Salary-Bonus-Stock-Op...
- godzillabrennus 7y agoHis lifetime earnings will now be greatly diminished as a felon. He would likely have spent a fortune on legal fees before accepting this plea. He made a very stupid decision and it will impact the remainder of his life.
- human20190310 7y agoHis potential lifetime earnings were probably already suffering as a result of being a CIO who presided over a massive data breach.
- true_tuna 7y agoAmerica, where the legal fees hurt worse than the punishment.
- nojvek 7y agoWell, it’s the same for puny things. Insurance spike hurts way more than an over speeding fine.
- Macross8299 7y agoIt really depends on how precarious he thought his position was after the breach. If his career as an executive would not be significantly harmed by breach, trading 4 months in jail and 5 million+ future career earnings as an executive for a 500k payday is not something rational people do, IMHO.
- ergocoder 7y agoYeah, not really worth it. A rank-and-file engineer at Google already earns $200k to $500k. This is a C-level at a large company. I'd say $500K isn't much. Very dumb decision by CIO, to be honest.
- stefan_ 7y agoThe difference to selling his options after the data breach was only 117k, though. That was the profit through insider trading.
- avip 7y ago... in retrospect.
- nilkn 7y agoHe lost his career and all subsequent earnings, which would have been substantial at the C-level executive tier. He’s only ~42 — this loss of earnings will vastly exceed a small $500k payday at that career level. And we don’t see the probably astronomical figure he paid in legal fees. I find it very hard to believe he actually would consider this an optimal investment strategy.
- 4ntonius8lock 7y agoThis logic literally applies to everyone going to jail. It's not like C level people are some blue blood creature that feels the consequences of a criminal record differently than the rest of us.
- user5994461 7y agoC levels are making multiple millions per year and could retire anytime. They don't need to get a new job. The $1M from this sale alone is about what many people would earn in an entire lifetime.
- hammock 7y ago>C levels are making multiple millions per year and could retire anytime You must not know many C levels... The majority of those in my sphere are loaded down with jumbo mortgages, private school and college obligations. And they're not all making multiple millions per year.
- alasdair_ 7y ago>You must not know many C levels... The majority of those in my sphere are loaded down with jumbo mortgages, private school and college obligations. And they're not all making multiple millions per year. The average CIO at a fortune 500 (which is what we're talking about) gets $1.4MM according to https://blogs.wsj.com/cio/2016/09/12/small-data-what-fortune-500-cios-get-paid/ https://blogs.wsj.com/cio/2016/09/12/small-data-what-fortune... So yes, not multiple millions but it's quite a difference from the average startup CIO.
- beering 7y agoI think that's not an accurate description. He avoided $117,000 in losses by trading on inside info. The gain is just sale price - purchase price. If he hadn't traded on insider info, he would've been able to gain $500k - $117k since Equifax stock did not go below his purchase price. So he had to pay back what he avoided losing plus $55k, plus serve time. I think the monetary fine is pretty low, but the gov't is not stupid - they made sure he came out negative.
- mikeash 7y agoI don’t know if I agree with the “not stupid” part. It may have worked out this time but there are many examples where the fine is less than the gain. Although those examples are often less about stupidity and more about not wanting to actually punish.
- alasdair_ 7y ago>He has to pay back about $175k and go to jail for 4 months. He also lost his job, has a felony conviction that will harm his ability to find another one and likely paid a fuckton in lawyers fees that exceeded any gain he made. Not saying this was a fair sentence - I think it was lenient - but the top of the line number isn't the whole punishment.
- koolba 7y ago> He also lost his job, has a felony conviction that will harm his ability to find another one and likely paid a fuckton in lawyers fees that exceeded any gain he made. Harm is too soft a word. It’s down right impossible to get a job in a regulated industry with a felony conviction.
- deleted 7y ago[deleted]
- true_tuna 7y agoDon’t you know by now that the American legal system doesn’t punish the rich and powerful?
- 4ntonius8lock 7y agoI know it's a plea deal, but: Reward: $1,000,000~ Profit Potential Cost When Caught: Restitution $117,117.61 + $55,000 Fine + 4 Months Jail Time Odds of Getting Caught: ? I feel the ? part is probably pretty low. Like single digit low. Seems like pretty bad disincentive. Especially when compared to how we disincentive petty things like shop lifting. How much more egregious will our legal system get?
- esoterica 7y agoRead the article again, the profit was $117k, not $1m.
- 4ntonius8lock 7y agoHe cashed almost $1m. He WOULD have lost $117k. So after all the chips fell, that was his ill-gotten amount. But he didn't know that at the time. He knew the stocks were going down. How much is anyone's guess. The externalizations of their failure are a multi billion dollar matter. It wasn't a small issue. There was a real potential their stock would plummet. From his perspective at the time, he was getting almost $1m, which he might not get otherwise. Furthermore, the reason for the stock going down in the first place was HIS fault. He was the CIO. The information leak was directly on his shoulders.
- esoterica 7y agoThe restitution was exactly equal to the profit (and there was a fine imposed on top of that). If he had made $1m instead of 117k then he would have been made to pay back $1m. Your assertion that the restitution structure would have allowed him to pay back less then the amount he profited by is nonsensical.
- jtdev 7y ago4 months!? The sentencing of white collar crimes in the U.S. juxtaposed to drug offenses and crimes of desperation should make us all question the legitimacy of our legal system.
- ryanlol 7y agoOTOH insider trading while "unfair" doesn't necessarily hurt anyone. (not that the crimes you mentioned necessarily hurt anyone either)
- pessimizer 7y agoOnly if nobody bought that stock.
- ryanlol 7y agoThey wanted that stock for a specific price, they didn't lose anything.
- philshem 7y ago...based on the available market information.
- ryanlol 7y agoYes, and the insider traders added more information to the market.
- tanderson92 7y agoThey had a duty to shareholders which they broke when they abused their position of trust within the company to hurt those shareholders by stealing information from the company and using it for personal gain.
- m-p-3 7y agoHe surely learned to be more careful next time or risk getting a slap on the wrist again.
- jjeaff 7y agoHe had to pay back everything he earned due to the insider trade plus $55k in fines. Plus prison for 4 months and a permanent criminal record. Doesn't sound like a slap on the wrist for trading on inside information. But I don't disagree that lots of other crimes are way overcharged.
- alaithea 7y agoThis is doubly ridiculous. As CIO he ought to be held accountable for the loss of millions of people's personal data. Instead, he gets what amounts to a slap on the wrist for insider trading.
- 4ntonius8lock 7y agoThe really crazy part is, a significant percentage of American's find this fine. You'll even find a large number of comments here defending the sentencing saying 'but he will lose his job'. As if that doesn't happen to everyone else convicted of crime.
- dragonwriter 7y ago> You'll even find a large number of comments here defending the sentencing saying 'but he will lose his job'. As if that doesn't happen to everyone else convicted of crime. It does not, in fact, happen to everyone else convicted of a crime.
- 4ntonius8lock 7y agoCan you please tell me of one job where you can betray the trust of your employers to the point of going to jail and not lose your job? Serious question. I might be missing something, though I will be honest and say I doubt it.
- dragonwriter 7y ago> Can you please tell me of one job where you can betray the trust of your employers to the point of going to jail and not lose your job? The statement upthread did not end “anyone convicted of a crime involving betrayal of the trust of their employer.” (I'd also question whether insider trading of the type here really fits that description, as the employing corporation is not really the victim.)
- 4ntonius8lock 7y ago
- sverige 7y agoAll that money apparently paid for good lawyers, and the social connections he probably has didn't hurt either. It's a lot better to be rich than poor of you're going to commit crimes.
- philshem 7y ago> The following Monday, Ying conducted web searches on the impact of Experian's 2015 data breach on its stock price. This is the most embarrassing part. CIO’s gotta know better.
- true_tuna 7y agoIf the guy had any infosec sensibilities the breach wouldn’t have happened the way it did to begin with.
- aj7 7y agoThis is why financial crimes above a certain value, say $2M, need to be CAPITAL offenses. I know this sounds crude. To bankers, and other white-collar types, cruel and unusual. But for these highly educated types, used to calculating probabilities, we have to add the possible risk of unlimited loss. For the already affluent possible scofflaw, this would act as a powerful deterrent.
- Gibbon1 7y agoI wouldn't go that far but I think minimum jail time of 1 day per $1000 would be 'fair enough'. $2M would net you five and a half years in jail.
- Zhenya 7y agoThis is brilliant. Let the criminals do the math and figure out what their time is worth. In this case 500k for 4 months is a joke.
- bariswheel 7y agolong bitcoin, short the banks.
- fnord77 7y agoall to avoid $117,000. A measly amount for someone making C-level money. His biggest punishment is that his career is ruined.