Senators ripped former Equifax CEO Richard Smith over executives unloading almost $2 million worth of stock in the days after the credit reporting firm suffered a massive hack.
Lawmakers took turns blasting Smith during a Senate Banking Committee hearing over the breach on Wednesday and demanded answers on the stock sales.
“I’ve got to tell you something and this is just a fact. It may have been done with the best of intentions and no intent for insider trading, but this really stinks. I mean it really smells, really bad,” said Sen. Jon TesterJonathan (Jon) TesterSchumer opted for modest rules reform after pushback from moderates The Hill's 12:30 Report - Presented by Connected Commerce Council - Biden faces reporters as his agenda teeters Democrats' filibuster gambit unravels MORE (D-Mont.).
Executives reportedly sold stock in the company after the hack but before the breach was disclosed to the public.
Smith defended the executives in question: John Gamble, the chief financial officer; Joseph Loughran, president of U.S. information solutions and Rodolfo Ploder, president of workforce solutions. He said they were not aware of the hack when they sold their stocks.
At the time they unloaded their shares, Smith told lawmakers, Equifax only knew that “suspicious activity,” had occurred but did not understand the extent of the breach. Smith said the company sees suspicious activity from attempted hacks millions of times a year and suggested this hack initially seemed no different.
But lawmakers appeared skeptical.
“The stock sales seem to suggest more information than we are getting here,” said Sen. Tim ScottTimothy (Tim) Eugene ScottThese Senate seats are up for election in 2022 The Hill's 12:30 Report - Presented by Facebook - Supreme Court allows lawsuits against Texas abortion ban Rapper French Montana talks opioid epidemic, immigration on Capitol Hill MORE (R-S.C.). “What you guys want us to believe ... is that the three luckiest investors who sold their stock did so without any knowledge that the suspicious activity may be bigger or more powerful than any other suspicious activity?”
Scott noted the executives made over $600,000 by selling the stock when they did.
When the public was notified of the breach in September, Equifax stocks crashed.
Democratic lawmakers, including Sen. Brian SchatzBrian Emanuel SchatzThese Senate seats are up for election in 2022 Overnight Energy & Environment — Starting from 'scratch' on climate, spending bill Eight senators ask Biden to reverse course on Trump-era solar tariffs MORE (D-Hawaii), have been hammering Equifax over the sales and demanded answers.
Equifax suffered the breach on July 29. Gamble, Loughran, and Ploder sold stock and exercised options worth a collective $1.8 million on Aug. 1 and 2.
Equifax revealed the breach to the public in September.
The Department of Justice said last month that it would investigate the sales for potential insider trading.