Ex-Equifax exec accused of insider trading
SEC: He sold his shares after learning of breach
Days before millions of U.S. consumers learned about the Equifax cyber breach that exposed their personal information to hackers last fall, one of the credit-reporting giant’s executives was more worried about the effect on his stock holdings.
Jun Ying, who had been next in line to become the firm’s global chief information officer, sold all of his Equifax shares 10 days before the firm publicly disclosed the attack that raised the specter of identity theft and potential fraud using data for approximately 148 million customers, federal civil and criminal authorities charged on Wednesday.
Ying vested all of his stock options after learning about the breach and then sold the shares, reaping nearly $1 million, the Securities and Exchange Commission alleged in a civil complaint filed in Atlanta federal court.
The 42-year-old Atlanta resident allegedly avoided more than $117,000 in losses by dumping his stake before Equifax’s public disclosure of the breach triggered a plunge in the company’s stock value.
The civil complaint charges that Ying violated antifraud provisions of federal securities laws.
The complaint seeks disgorgement of Ying’s allegedly ill-gotten gains, plus interest and penalties.
Along with the SEC civil allegations, Federal prosecutors in the Northern District of Georgia said Ying was indicted Tuesday on criminal insidertrading charges.
“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 announcing the accusations.
Ying’s defense attorneys, Douglas Koff and Craig Warkol, declined to comment.
“Upon learning about Mr. Ying’s August sale of Equifax shares, we launched a review of his trading activity, concluded he violated our company’s trading policies, separated him from the company and reported our findings to government authorities,” Equifax said in a formal statement.
Ying did not receive a severance package, said the Atlanta-based firm, which is one of the nation’s three major credit-reporting bureaus. The company declined to discuss details of its investigation of Ying’s trading but said it is continuing to cooperate with federal authorities.
An Equifax employee from January
2013 until October 2017, Ying had been the chief executive of the company’s U.S. Information Systems Business at the time of the alleged insider trading. He was often entrusted with non-public information about the company as part of his job, the SEC complaint said.
Company superiors did not initially tell Ying that Equifax had been victimized by cyberthieves. However, he began to infer the truth after communications with other executives on Aug.
25, the SEC complaint alleged. “Sounds bad. We may be the one breached. ... Starting to put 2 and 2 together,” he texted to another executive that evening, the complaint said.
Three days later, Ying allegedly used an Internet search engine to find information about what happened to shares of Experian, one of the nation’s other two major credit-reporting bureaus, when the competitor was hit with a September 2015 cyber attack.
Within an hour of running that search, he allegedly exercised all of his vested options to buy Equifax shares and then sold his entire stake.