The SEC says the former manager used his inside knowledge of the credit bureau's massive data breach to illegally profit
A former Equifax manager has been charged with insider trading in connection with last year’s massive data breach, which exposed the personal information of about 148 million consumers.
The Securities and Exchange Commission has charged Equifax software engineering manager Sudhakar Reddy Bonthu with trading on confidential information he received while creating a website for consumers impacted by the breach.
The SEC said that Bonthu was told that the website was being developed for an unnamed potential client. However, based on the information he received, Bonthu was able to tell that Equifax itself had been the victim of the breach. The SEC said that Bonthu then purchased Equifax put options, allegedly violating company policy by trading on non-public information. A put option is an option contract that gives its owner the right to sell assets at a specified price within a specified time frame.
Less than a week after Bonthu bought the options, Equifax announced the data breach, sending its stock plummeting by 14%. Bonthu sold the options and netted more than $75,000 – a more than 3,500% return on his investment, according to the SEC.
Equifax fired Bonthu in March after he refused to cooperate with an internal investigation into whether he violated the company’s insider trading policy.
“As we allege, Bonthu, who was entrusted with confidential information by his employer, misused that information to conclude that his company had suffered a massive data breach and then sought to illegally profit,” said Richard R. Best, director of the SEC’s Atlanta Regional Office. “Corporate insiders simply cannot abuse their access to sensitive information and illegally enrich themselves.”
The US Attorney’s Office for the Northern District of Georgia has also filed criminal charges against Bonthu.
This is the second Equifax employee the SEC has charged with insider trading. In March, the watchdog charged Jun Ying, former chief information officer of the company’s US business unit. According to the SEC, shortly before the breach was announced, Ying exercised all his vested stock options and sold the stock, raking in more than $1 million.
