Three Equifax Inc. senior executives sold almost $1.8 million worth of stock shortly after the company discovered a security breach, but before the breach was announced to the public.
The company alleges the 3 executives were not officially informed of the hack, which possibly compromised information on about 143 million U.S. consumers, before they all just happened to choose to sell, reported Bloomberg.
The large transactions were not part of their scheduled trading plan, which should raise a serious red flag.
“The credit-reporting service said earlier in a statement that it discovered the intrusion on July 29. Regulatory filings show that on Aug. 1, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of the filings lists the transactions as being part of 10b5-1 scheduled trading plans,” noted Bloomberg.
The Equifax statement said intruders accessed names, Social Security numbers, birth dates, addresses and driver’s-license numbers, as well as credit-card numbers for about 209,000 consumers. The incident ranks among the largest cybersecurity breaches in history.
Equifax shares fell about 13% after the announcement of the hack, but luckily for the executives, they avoided the loss.
“I don’t know how the board will allow these executives to continue in their positions,” said Bart Friedman, a senior counsel at Cahill Gordon & Reindel LLP, who advises boards on matters including corporate compliance and enforcement challenges. “Yes, they should have a careful investigation and have an independent law firm interview the executives and review their emails and determine what they knew and when, but the end result is likely clear.”
Judy Burns, a spokeswoman for the Securities and Exchange Commission, declined to comment.