Ex-Equifax exec charged with insider trading
A former top Equifax executive was charged Wednesday with insider trading for selling nearly $1 million in company stock after he learned about a major data breach in 2017 but before it was publicly announced.
Jun Ying, the former chief information officer of Equifax’s core U.S. consumer reporting division, exercised all of his vested stock options and sold nearly $1 million in shares a little more than a week before Equifax announced that hackers had broken into its systems, according to the Securities and Exchange Commission.
The breach compromised sensitive information, including Social Security numbers, of more than 140 million Americans. Ying avoided $117,000 in losses because of the timing of his sale, the SEC said in a civil complaint.
The U.S. attorney’s office in Atlanta announced parallel criminal charges against Ying on Wednesday.
“Corporate insiders who learn inside information, including information about material cyber intrusions, cannot betray shareholders for their own financial benefit,” said Richard R. Best, the director of the SEC’s office in Atlanta, where Equifax has its headquarters.
Stock trades by Equifax employees have drawn scrutiny since the breach was disclosed. Four senior executives, including the consumer credit reporting agency’s chief financial officer, sold shares worth $1.8 million in the days after the company began investigating the breach and more than a month before the public was told of it.
After conducting its own investigation, the Equifax board concluded that none of the four executives knew of the breach when they made their trades.
Ying’s trades were different. He was not among the executives whose trades initially came under scrutiny.
On a Friday afternoon in late August, an email went out to several top executives at Equifax asking them to begin work immediately on an emergency project related to a “VERY large breach Opportunity,” according to the SEC complaint. Ying was one of the recipients.
Later that day, after a brief conversation with David Webb, Equifax’s global chief information officer, Ying began to understand the extent of the problem, the SEC said. He texted one of his employees: “We may be the one breached ... Starting to put 2 and 2 together.”
Three days later, a Monday, Ying exercised all of his vested options to buy Equifax shares, and then sold them immediately.
Webb, Ying’s boss, retired in September, shortly after the breach was disclosed. Equifax offered to promote Ying to fill the vacancy. The offer was rescinded when the company learned of Ying’s stock trading, according to the SEC’s complaint.
In an interview Wednesday, Julia Houston, Equifax’s chief transformation officer, said the company learned of Ying’s trades during an internal investigation. On Oct. 16, the company summoned him to a meeting at which it planned to fire him, she said. Ying resigned instead.
Equifax alerted the SEC and the Justice Department about Ying’s trading, Houston said.
“We take corporate governance and compliance very seriously, and will not tolerate violations of our policies,” Paulino Do Rego Barros Jr., Equifax’s acting chief executive, said in a statement.
Houston declined to comment on whether the company is investigating any other suspicious trading activity.
Ying declined to comment through his lawyers at the firm Schulte Roth & Zabel.
Ying’s LinkedIn page shows that he left Equifax in October. It lists his current job as “a little bit of everything. Stay tuned.”