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Another ex-Equifax employee is charged with insider trading related to data breach

Key Points
  • Former Equifax software development manager Sudhakar Reddy Bonthu is charged with insider trading related to the data that affected 143 million people.
  • Equifax discovered the breach in July but didn't disclose it to the public until September. In between, some executives sold shares.
An Equifax Inc. slide is displayed on a monitor in October 2017.
Andrew Harrer | Bloomberg | Getty Images

Another former Equifax employee is facing insider trading charges.

Federal prosecutors said Thursday they charged a former software development manager, Sudhakar Reddy Bonthu, with insider trading. He is scheduled for arraignment Thursday by a federal magistrate in Atlanta. The charge came nearly four months after the former chief information officer of an Equifax business unit was accused of similar charges.

Prosecutors said the insider trading against Bonthu related to the massive data breach last July that Equifax disclosed to the public in September. The breach affected the records of 143 million people, according to the Federal Trade Commission.

The Securities and Exchange Commission filed separate civil charges against Bonthu on Thursday.

Bonthu, 44, was fired in March after refusing to cooperate with an internal investigation into whether he had violated the company's insider trading policy. The SEC says Bonthu worked on creating a website for consumers who were affected by the breach. He had been told the work was for a client but surmised it was for Equifax itself, and in the days before the breach became public he placed a bet in the options market that Equifax shares would fall.

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Former Equifax exec charged with insider trading

His profit was $75,000, the SEC said. Bonthu has agreed to return the money plus interest and to a permanent injunction to settle the SEC charges.

In a statement, Atlanta-based Equifax said, “Upon learning about the sales of Equifax shares by Mr. Bonthu, we immediately launched a review of his trading activity and separated him from our company after he declined to cooperate with our inquiry. We are fully cooperating with the SEC and the Department of Justice, and will continue to do so. We take corporate governance and compliance very seriously, and will not tolerate violations of our policies.”

After the data breach was revealed, questions about executives selling shares in the company emerged. Four top executives sold nearly $2 million of stock just days after the breach was discovered internally but weeks before the public was informed. A special committee of the board found that the sales by these executives were not improper and that they didn't know about the breach at the time of the sales.

But another executive, Jun Ying, was indicted in March of insider trading. Prosecutors say he used inside knowledge and sold the equivalent of $950,000 of stock before the breach was made public and Equifax shares dropped 14 percent.

Richard Best, director of the SEC's Atlanta bureau, said in a statement Thursday, "Corporate insiders simply cannot abuse their access to sensitive information and illegally enrich themselves.”

The SEC said the investigation is continuing.