
Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says - ColinFCodeChef
https://www.bloomberg.com/news/articles/2018-03-14/sec-says-former-equifax-executive-engaged-in-insider-trading
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kyrra
Dupe of
[https://news.ycombinator.com/item?id=16584980](https://news.ycombinator.com/item?id=16584980)

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rossdavidh
"Three Equifax Inc. senior executives -- Chief Financial Officer John Gamble,
and unit presidents Joseph Loughran and Rodolfo Ploder -- sold shares worth
almost $1.8 million in the days after the company discovered the breach.
Equifax has said those three executives had not been informed of the incident
when they initiated the sales."

While I'm not sympathetic to the U.S. CIO named in this article, I find it
somewhat dubious that none of the above executives knew anything. In any
event, I wouldn't take Equifax's word for it. The finance dudes get a clean
bill of health, and the tech guy gets thrown to the feds. Again, not that Ying
deserves my sympathy either, but...

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21
> The finance dudes get a clean bill of health, and the tech guy gets thrown
> to the feds.

Maybe the finance dudes are not so retarded to sell their stock immediately
after one of the biggest data leaks in history with no ahead of time sell
plan, and after googling what was the impact on the stock price of another
data leak.

Pretty bad op-sec for a tech guy. Or maybe he's just financially clueless, and
doesn't know the the reason this doesn't happen more often (executives selling
after really bad news) is exactly because the SEC it's doing a good job
policing it and finance guys know that you need a SEC-proof alibi for any
sell.

The reason that many stocks drop sharply 5-10% after some company news
releases after being relatively flat is exactly because executives are scared
shit-less of selling or leaking the info before that news is public.

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Coding_Cat
Maybe the finance guy noticed the CIO putting in a huge sell option and
figured "he might know something, better join in" and this caused the others
to follow suit.

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bigtunacan
That would still constitute insider trading.

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gene91
If you guessed that your employer may be in trouble and then sold stock, is
that considered insider trading?

Let's say, you are in charge of security. The CEO is never interested in your
work. One day, you got an invitation to meet with the CEO. You sold all your
stock before you go to the meeting (based on a guess that something bad might
have happened). Is that illegal? Is the meeting invite considered material non
public information?

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lowdest
The SEC has rules for what constitutes legal and illegal insider trading:
[https://www.sec.gov/fast-
answers/answersinsiderhtm.html](https://www.sec.gov/fast-
answers/answersinsiderhtm.html)

Generally though, the rules don't disallow average employees from guessing
about the future stock price. It becomes illegal insider trading if somehow
you had obtained material non-public information to make the decision.

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sgroppino
Appalling. One would have thought that a C-level officer in a listed company
would know enough about insider trading as to not do it...

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googlryas
The company was intentionally keeping him in the dark about the matters, and
he put things together. Is that really insider trading?

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gknoy
Insider trading requires inside _knowledge_. Deducing it oneself is not a
defense. Just like classified information, it doesn't matter how you got it,
it matters what you do with it.

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googlryas
At what point does the deducing it yourself become allowable(if ever)? If I
work at Amazon, and see Bezos in a conference room banging his hands on a desk
and raging(which is not his normal behavior at all), I sell AMZN based on
that, and then it turns out they had a massive data breach that tanks the
stock price, is that insider trading?

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rdtsc
> Ying was invited to a mandatory conference call. While he didn’t initially
> join the call, one of his direct reports did, the SEC said.

He was trying to sell his stock and didn't wait an official trail of him
knowing about it. It would be hard to deny knowing about it once he joined the
conference call. Did I read that right? Because that's what it sounds like to
me.

> “VERY large breach opportunity”

"opportunity" what does that even mean? Were they celebrating and planning on
monetizing it? That kind of makes sense I guess. Since they get to charge
people to freeze their credit, their stock has recovered and executive retired
happily to Bahamas or wherever. It was an opportunity after all!

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withinrafael
Per the complaint, with my notes in brackets:

Project Sparta [breach tooling team] was kept separate from Project Sierra
[breach action team] to limit the number of people who knew that Equifax
itself had been breached. Those Equifax employees who were only part of
Project Sparta were not told that Equifax had been breached, but were instead
told that they were working for an unnamed client that had experienced a large
data breach [...]

[https://www.sec.gov/litigation/complaints/2018/comp-
pr2018-4...](https://www.sec.gov/litigation/complaints/2018/comp-
pr2018-40.pdf)

~~~
googlryas
I suppose the firewalls between Project Sparta, Sierra, and the rest of the
company explain why the 'equifaxsecurity2017.com' or whatever it was called
website was a completely separate thing and not part of equifax.com

~~~
newbie912
No, that was public relations 101. Equifax the company and their domain can
move past the beach without dragging along the baggage that's attached to that
quasi-random, only ever so slightly connected domain. Mitigation playbook page
1, baby!

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lsh123
"Prosecutors say he searched on the internet for what might happen to Equifax
stock when the news of the attack broke"

1) CIO should probably know the answer w/o searching. 2) CIO should probably
know how to search w/o leaving evidence trail (incognito mode in a coffee shop
on personal laptop for starters).

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intopieces
If insider trading laws didn't exist, would we have known that something was
wrong more quickly? Are high-volume trades from executives public? It seems to
me that insider trading laws mean people take every step to keep bad things
about a company secret, which is not good for consumers.

~~~
googlryas
It's not about keeping bad things about a company secret - it is about letting
the world of investors know at the same time important information.

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ThrustVectoring
That's not the point of insider trading laws. The point is to prevent
misappropriation of insider knowledge that you acquire as a course of
fulfilling your job responsibilities.

If you have material information about a company that others don't, you're
more than welcome to trade based on it. The profit incentivizes accurately
pricing securities. If you know that some other company is concealing massive
fraud, feel free to short the daylights out of it and write an exposé.

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cjbprime
I wonder if this is a step on the way to going after the CEO too.

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breitling
According to this article, apparently, the other executives hadn't been
"informed of the breach" when they sold their stocks.

My bullshit detector is going off the charts.

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newbie912
No kidding. He wasn't told either, but easily figured it out. The rest of the
executives should by charged with insider trading if they knew, or fired for
incompetence if they were unable to figure it out.

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icedchai
What would’ve happened if this guy just bought some puts in a regular
brokerage account?

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jarsin
That's just more crimes added to the one he already committed. Failure to
disclose, conspiracy etc.

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paul7986
Equifax is still around? :-(

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m3kw9
Not having clicked thru the link, that doesn’t sound good for his insider
trading case

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razwall
The article is about the insider trading charges that were filed against him
today, so yeah.

