Federal officials have accused a former Equifax executive of insider trading in connection with an alleged scheme centered around the data breach that compromised the personal information of nearly 150 million Americans last year.
The Securities and Exchange Commission and Department of Justice have announced separate actions against Jun Ying, a former chief information officer at the credit rating firm who allegedly unloaded nearly a million dollars worth of Equifax stock shortly before the company publicly disclosed the breach last September, according to authorities.
In a lawsuit Wednesday, the SEC alleged Mr. Ying committed insider trading when he sold about 6,800 Equifax shares late last August, effectively avoiding roughly $117,000 in losses that he would have incurred had he waited until the agency’s public disclosure on Sept. 7.
“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 Best, director of the SEC’s Atlanta Regional Office, said in a statement.
A federal grand jury has separately returned criminal insider-trading charges against Mr. Ying, 42, the Justice Department announced Wednesday.
“This defendant took advantage of his position as Equifax’s USIS Chief Information Officer and allegedly sold over $950,000 worth of stock to profit before the company announced a data breach that impacted over 145 million Americans,” U.S. Attorney Byung Pak said in a statement. “Our office takes the abuse of trust inherent in insider trading very seriously and will prosecute those who seek to profit in this manner.”
Mr. Ying deduced Equifax had been breached following a phone conversation with the company’s global chief information officer on Friday, Aug. 25, according to the SEC.
“We may be the the one breached … Starting to put 2 and 2 together,” Mr. Ying allegedly texted a subordinate moments after that phone call, officials alleged.
Mr. Ying subsequently researched how the markets reacted to a previous data breach disclosure involving competing credit rating agency, and on the following Monday he sold sold all his Equifax stock options, worth about $950,000, according to the SEC lawsuit.
Mr. Ying resigned from Equifax in October after an internal review concluded that he had violated the company’s trading policies, and the results of that investigation were subsequently forwarded to federal authorities, Equifax Interim CEO Paulino Do Rego Barros, Jr. said in a statement.
“We are fully cooperating with the DOJ and the SEC, and will continue to do so,” his statement said. “We take corporate governance and compliance very seriously, and will not tolerate violations of our policies.”
An attorney for Mr. Ying could not immediately be reached for comment Wednesday, Bloomberg reported.
Equifax said in September that an online vulnerability was exploited causing the company to leak personal data pertaining to roughly 145 million customers, including names, Social Security numbers and birth dates, among other sensitive data, spurring investigations launched by the Justice Department, Federal Trade Commission and Consumer Financial Protection Bureau, in addition to attorneys general from all 50 states.
Equifax previously determined that three other executives sold shares worth nearly $2 million shortly after the breach was discovered, but the company ultimately concluded that none of them had advance knowledge of the security incident at the time.
• Andrew Blake can be reached at ablake@washingtontimes.com.
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