Second former Equifax employee charged with insider trading in massive data breach
A former software developer for Equifax faces insider trading charges related to the company’s massive data breach last year, federal prosecutors said.
Sudhakar Reddy Bonthu was set to be arraigned Thursday, according to the U.S. attorney’s office in Atlanta. Bonthu used nonpublic information to determine Equifax had been breached last year and then bought put options that he exercised for a profit of $75,000 after the breach was announced, according to a court filing.
It wasn’t immediately clear whether Bonthu had an attorney who could comment on the charges.
He’s the second former employee of the Atlanta-based credit reporting company to face insider trading charges related to last year’s data breach. Jun Ying, former chief information officer of Equifax’s U.S. Information Solutions, was indicted in March. The Securities and Exchange Commission on Wednesday also charged Ying with insider trading.
Equifax Chief Financial Officer John Gamble and three other executives sold shares worth a combined $1.8 million days after Equifax discovered suspicious activity on its network, but Equifax said an independent committee determined that these executives did not know of the breach when their trades were made.
A total of about 147.9 million Americans have been affected by Equifax’s data breach, which remains the largest exposure of personal information in history. It was disclosed to the public Sept. 7.
From mid-May through July 2017, unknown individuals accessed some of Equifax’s databases without authorization, acquiring names, Social Security numbers, birthdates, addresses and, in some cases, driver’s license numbers, the court filing says. Federal authorities say Equifax discovered the suspicious activity on its network on July 29.
In mid-August, the company imposed a trading blackout date for employees who were aware of the breach.
On Aug. 25, Bonthu and other Equifax employees were asked to help respond to the breach, though they were told the work involved a potential Equifax customer, not Equifax itself, the court filing says. He was told the target date for announcing the breach was Sept. 6. On Sept. 1, Bonthu used his wife’s brokerage account to buy 86 put options in Equifax stock that expired Sept. 15, according to the filing. Put options allow the holder to make a profit if the stock price drops.
Equifax shares plunged in value after the company disclosed the breach Sept. 7. Bonthu exercised his options for a profit of more than $75,000, the filing says.
Bonthu told a colleague he had figured out it was Equifax that had been breached before the information was public, prosecutors say.