A former Equifax executive was charged on Wednesday with selling his shares in the company based on insider knowledge that it had been exposed to a massive security breach.
The U.S. Securities and Exchange Commission said Jun Ying, who was the chief information officer of Equifax’s United States Information Systems unit, avoided more than $117,000 in losses by dumping his stock more than a week ahead of Equifax’s public announcement of the hack on Sept. 7, 2017.
According to the SEC, Ying concluded from internal communications as early as Aug. 25, a Friday, that Equifax was the victim of the breach and that suggestions the victim was a client were merely a cover story.
After learning that rival Experian’s shares dipped 4% after it disclosed an earlier security breach, he allegedly exercised his stock options and sold the shares the following Monday. The SEC is seeking disgorgement and a fine in a civil complaint against Ying.
“Ying used confidential information to conclude that his company had suffered a massive data breach, and he dumped his stock before the news went public,” Richard R. Best, director of the SEC’s Atlanta Regional Office, said in a news release.
The Equifax hack compromised the social security numbers and other personal information of about 148 million U.S. customers. According to the SEC, Ying was among the employees who were advised in an email on Aug. 25 that the global consumer solutions unit was working on a “VERY large breach opportunity.”
A few hours later, Ying allegedly texted a subordinate, “On the phone with [global CIO]. Sounds bad. We may be the one breached … Starting to put 2 and 2 together.”
“Numerous additional communications [that evening] informed Ying that this breach was unusual, and indicate that Ying used the information entrusted to him as an Equifax employee to conclude that Equifax was the victim of the breach,” the SEC alleged.
After Equifax disclosed the breach, its shares fell nearly 14%. Ying was offered the job of company CIO on Sept. 15 but agreed to resign in October following an internal investigation of his stock trading.