For CNBC's Jim Cramer, insider trading is no joke.
"The moment a company's management finds out that it possesses material non-public information, they must immediately close the window on insider selling. Otherwise, the chance is way too great that some executive will take advantage of that inside information and dump stock, which may have happened at Equifax," the "Mad Money" host said.
So as federal prosecutors reportedly look into why three Equifax executives sold almost $2 million worth of the company's shares just days after Equifax underwent a massive cybersecurity breach, Cramer called on the Securities and Exchange Commission to investigate.
Management learned of the breach, which put information from over 145 million consumers at risk, on July 29. Equifax's general counsel should have been advised to close the trading window "immediately," Cramer said.
But Richard Smith, then-CEO of Equifax, testified to Congress that he didn't tell his board about the breach for almost three weeks.
Then, on Aug. 1 and 2, three top Equifax executives — Chief Financial Officer John Gamble, U.S. Information Solutions President Joseph Lougran and Workforce Solutions President Rodolfo Ploder — shed $946,374, $584,099 and $240,458 worth of the company's shares, respectively.
"This is the type of thing that Congress should immediately refer to the SEC to examine why the window was kept open when it's so important to slam it shut the moment the company is in possession of material non-public information," Cramer said. "Honestly, I think this is truly frightening, so if Equifax won't cooperate with the SEC, I really think the matter should be referred immediately to the Justice Department for an insider trading criminal investigation."
Cramer argued that it is imperative for the SEC to follow through because, despite Equifax's "public shaming" on Capitol Hill, little damage has been done to the company's reputation with its clients, which include insurance firms, credit unions, government agencies and big banks.
Instead, most of the losses were incurred by Equifax's shareholders, Cramer said.
"I'm sure the government has no idea how to get at what's happened here, given how our country so often fails to go after executives for wrongdoing," Cramer said. "But if the SEC could find that Equifax knowingly failed to observe the trading window rules, then it could easily go after these execs. The way I see it, the three insiders who sold either didn't know about the hack, in which case they should be fired for a lack of basic knowledge about their own company, negligence, or they did know, in which case they should be prosecuted to the fullest extent of the law for selling when they did."
A spokesman for the SEC declined CNBC's request for comment. In a Bloomberg story published on Sept. 18, a person familiar with the federal probe said that the SEC is "working with prosecutors on the investigation into stock sales."