Possible Insider Trading Amidst Hack

Heidi Heitkamp is one of 36 senators calling for an investigation regarding stock sales.
“If that happened, somebody needs to go to jail,” Sen. Heidi Heitkamp said. “It’s a huge problem when people can act with impunity with no consequences.”

Heitkamp made these comments at a credit union industry conference in Washington in response to three executives who sold nearly $2 million in Equifax shares between July 29 and the public announcement of the hack Sept. 7.

Thirty-six senators, including Heitkamp, are calling for federal authorities to investigate these sales. “How is that not insider trading?” Heitkamp said.

According to the U.S. Securities and Exchange Commission, insider trading is the buying or selling of stocks with knowledge of nonpublic information. Traders who are found guilty of insider trading can serve a maximum of 20 years in prison and a maximum fine of $5 million.

According to Equifax, criminals “(exploited) a U.S. website application vulnerability to gain access to certain files.” These files included sensitive data that include names, Social Security numbers, birth dates, addresses and driver’s license numbers. Other information the criminals pulled include credit card numbers for approximately 209,000 U.S. consumers.

The hack occurred from mid-May through July and impacts approximately 143 million U.S. consumers.

Equifax discovered the hack July 29 and stock has plummeted since.

The stock has dropped roughly 35 percent — closing on July 28 at $145.09 per share and $94.05 Sept. 14.

“This clearly is a disappointing event for our company,” Chairman and Chief Executive Officer Richard F. Smith said. “I apologize to consumers and our business customers for the concern and frustration this causes.”

“While we’ve made significant investments in data security, we recognize we must do more,” Smith said. Part of this effort to do more includes the establishment of a website to help consumers determine if their information has been potentially impacted and helps consumers sign up for credit file monitoring and identity theft protection.

Leave a Reply