Equifax Executives Take The Money And Run After Hack Discovery

Equifax Executives Take The Money And Run After Hack Discovery

Earlier today the news broke that Equifax had been hacked and data belonging to 143 million people was stolen, beginning on July 29th of this year. Not just any data, either. According to the Equifax release, Social Security numbers, drivers license numbers, and dates of birth were among the data grabbed. Nearly 200,000 credit card numbers were also snagged during the breach.

For perspective, 143 million is over 80 percent of the current United States working population. It represents about 56 percent of all adults over age 18. Odds are, if you have a credit card, your data was stolen.

So to clean up, Equifax has created a website and will provide identity theft services, blah blah blah, but as you might imagine, their stock took a hit when they put out the press release about it earlier today.

What do you think Equifax executives did first? Did they contact law enforcement? Did they set up a rapid response timeline? None of those that I'm aware of, though they may have.

Here is what I know three of them did. They exercised stock options.

Bloomberg News reports that Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2.

That's $1.8 million in rapid profit-taking ahead of what is going to be a disaster for this country and company. One-point-eight-million, in the pockets of three executives who knew those stock options wouldn't be worth anything when this news became public.

This should be illegal. Maybe it is. But if it isn't, it absolutely ought to be. It is outrageous.

Update:

After doing some cursory research on insider trading, it's hard to see how this is not that. The basic definition is to trade a stock based upon information that is nonpublic, which this information was at the time they exercised their options.

SEC definition:

"Insider trading" refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.


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Read this for a more thorough exploration of stock options and insider trading. This seems to fit the "misappropriation" theory.

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