Equifax ex-worker pleads guilty to fraud related to hack

A former Equifax worker pleaded guilty Monday to a charge of securities fraud. The charge is related to the company’s massive data breach, which exposed the personal data of more than 140 million Americans in 2017.

Sudhakar Reddy Bonthu was a software development manager at the Atlanta-based credit reporting company in September of last year when he used non-public knowledge of the data breach to make more than $75,000 off of security trades, federal prosecutors said.

The crime Bonthu pleaded to carries a maximum sentence of 20 years in prison and a $5 million fine, though prosecutors recommended a non-custodial sentence, meaning he would likely be under house arrest.

Prosecutors said Equifax placed Bonthu on a team tasked with developing an online interface for a company suffering from a data breach. But Bonthu figured out that company was actually Equifax, which had not yet publicly acknowledged the hacking. He bought options that allowed him to profit if Equifax stock dropped below $130 a share, prosecutors said.

When Equifax announced in September that it had been hacked by a third party, the company’s stock plunged, dropping from $142 a share on Sept. 7 to $123 the next day.

As part of his plea agreement with U.S. attorneys, Bonthu agreed to pay back the $75,000.

Bonthu is not a U.S. citizen and surrendered his Indian passport to the government at his first plea hearing. Bonthu was warned by the judge in Monday’s hearing that he could face deportation after serving his sentence.

This is the second insider trading case U.S. attorneys are pursuing related to the Equifax hack. Jun Ying, a former executive at the company, was indicted in March on charges of insider trading. Ying, whose case is still pending, is accused of dumping $950,000 in Equifax stock before the breach was announced.