Insider trading charges were announced Wednesday against a former Equifax executive who sold his shares for nearly $1 million before the company’s massive data breach was revealed to the public and the stock price plunged.
A federal grand jury on Tuesday indicted Jun Ying, 42, the former chief information officer of Equifax’s U.S. Information Solutions, part of the Atlanta-based credit reporting company. The Securities and Exchange Commission on Wednesday also charged Ying with insider trading.
In an emailed statement, lawyers Douglas Koff and Craig Warkol, who are representing Ying, declined to comment.
The SEC and U.S. Attorney’s Office in Atlanta said federal investigations are ongoing. Ying is the only former Equifax executive named in Tuesday’s indictment.
Equifax Chief Financial Officer John Gamble and three other executives sold shares worth a combined $1.8 million days after Equifax discovered suspicious activity on its network — and nearly a month before Ying sold his shares — but Equifax said an independent committee determined that these other executives did not know of the breach when their trades were made.
A total of about 147.9 million Americans have been impacted by Equifax’s data breach, which remains the largest exposure of personal information in history. It was disclosed to the public on Sept. 7.
The SEC noted that at the time of the breach, Ying was often entrusted with nonpublic company information and was a leading candidate to become the global CIO of Equifax, a job he was in fact offered on Sept. 15, the same day the company announced CIO Dave Webb would retire.
Federal authorities say Equifax discovered the suspicious activity on its network on July 29. In mid-August, the company changed administrative credentials for many of its internal databases. Ying was aware of these changes, and employees who reported to him were responsible for some of them. On Aug. 25, Ying, along with several employees who reported to him, were asked to help respond, although he was told then that the work involved a potential Equifax customer, not Equifax itself, the indictment says.
Ying sent text messages to a co-worker saying, “Sounds bad. We may be the one breached,” and “I’m starting to put 2 and 2 together,” the indictment says.
Three days later, Ying used his Equifax computer to do internet searches on the effect on the Experian stock price of a 2015 breach at that credit reporting company. Later that morning, on Aug. 28, he exercised all his available stock options and received 6,815 shares of Equifax stock, which he sold for more than $950,000. That represented a gain of more than $480,000, prosecutors said.
The SEC complaint says Ying worked at Equifax until October.
“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 an emailed statement. “We are fully cooperating with the DOJ and the SEC, and will continue to do so.”