Equifax stock sales prompt DOJ investigation for insider trading
Three officials sold $1.8 million in shares after the company learned of the security breach.
Things are about to get even worse for Equifax, and rightfully so. According to reports from Bloomberg, the US Department of Justice (DOJ) has opened a criminal investigation into Equifax officials' stock sales just before the announcement of the security breach that exposed data from 143 million US consumers. Equifax CFO John Gamble, President of US Information Solutions Joseph Loughran and President of Workforce Solutions Rodolfo Ploder dumped nearly $1.8 million in stock just after the company discovered the breach and about a month before it was announced. Equifax has maintained that the three didn't know about the breach when they sold the stock.
The Securities and Exchange Commission (SEC) is also looking into the sales and what the executives knew beforehand to see if the move constitutes insider trading. The DOJ investigation will work alongside the SEC's and will be headed by US prosecutors in Atlanta, say Bloomberg's sources. Those agencies are joined by the Federal Trade Commission (FTC), which is also looking into the breach. Last week, dozens of senators sent letters to the DOJ, SEC and FTC requesting investigations into potential insider trading.
There are a lot of eyes on this breach and two executives have already left the company, though Equifax says they retired. Chief Security Officer Susan Mauldin and Chief Information Officer David Webb left late last week.
Update: A new report from Bloomberg cites sources that claim Equifax suffered a separate security breach in March of this year, which could bring even more scrutiny to insider trading investigations. While the company has claimed that the three officials didn't know about the more recent breach when they sold their stock, it's unclear whether they knew about the March breach. And along with his August stock sale, Equifax CFO John Gamble sold over $1.9 million in stock on May 23rd -- a transaction that might now be of interest to the DOJ in light of the reports of a second, earlier breach.
