Former Equifax manager charged with insider trading tied to data breach

Former Equifax manager charged with insider trading tied to data breach
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The Securities and Exchange Commission (SEC) on Thursday charged a former Equifax manager with insider trading, alleging that he profited from bets based on nonpublic information about the company’s 2017 data breach.

Sudhakar Reddy Bonthu, who was a software engineering manager with the firm, allegedly made $75,000 through bets against the company’s stock placed before the breach was made public.

“Bonthu, who was entrusted with confidential information by his employer, misused that information to conclude that his company had suffered a massive data breach and then sought to illegally profit,” said Richard Best, director of the SEC’s Atlanta regional office, in a statement. “Corporate insiders simply cannot abuse their access to sensitive information and illegally enrich themselves.”

Equifax announced on Sept. 7 that the personal information of more than 100 million people had been accessed by hackers in July. Several of the credit bureau’s executives stepped down, and the company’s stock plummeted when markets opened the following day.

The SEC says Bonthu was assigned on Aug. 25 to develop an online user interface for victims of a data breach that he was told occurred at a client company. Bonthu realized by Aug. 31, through conversations with colleagues and work on the project, that Equifax was the victim of the data breach, according to the SEC.

The next day, Bonthu allegedly purchased 86 put options to sell Equifax stock at $130 per share, roughly $10 below where the company’s stock closed on the final day of trading before the breach was announced. He then sold the put options on Sept. 8 — the first day of trading after the breach announcement — as the company’s share price dropped by almost 14 percent, the SEC said.

By selling the options to buy Equifax stock at a higher price, Bonthu allegedly made $75,000 on the investment made with private information, the SEC alleged.

Bonthu worked at Equifax from September 2003 until he was fired for refusing to cooperate with an internal investigation into potential insider trading, according to the SEC complaint. He is the second former Equifax employee charged by the SEC for trades made with nonpublic information about the data breach.

The SEC in March charged Jun Ying, the company's former chief information officer, with insider trading after he allegedly saved more than $100,000 when he sold his stock after learning of the data breach before it was made public.