
Former Equifax Manager Charged with Insider Trading - moonka
https://www.sec.gov/news/press-release/2018-115
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paul7986
Who cares about this one lone guy and his punishment?

Why is Equifax still around.. we have no say or opt in system to allow them to
use our personal data for their financial gain.

I didnt agree to this! Isn't there an Equifax competitor that lets you opt in
and is all about security. If not one of their competitors needs to rebrand as
such or such a competitor needs to enter the market and whoop their a#*!

~~~
jedberg
You probably did opt in, many times. Pretty much every businesses that uses
their data (like every credit card company) also agrees to send them data, and
in turn require you to agree to allow them to send the data.

When you get a mortgage, you have to agree to send the data to equifax -- you
can't get a mortgage without it.

So the only way we'll fix this is by getting all of those companies to agree
not to send data to equifax, but they like sending data there, because they
get even better data in return.

~~~
drb91
Opting in implies a choice.... often times the “choice” is “give up your
personal information or you can’t get the service at all”, even if the service
is, say, a water utility.

A large part of the problem is that companies can pretend to use the
information as an ID when actually using it to just get credit history. I wish
we could simply pass a law saying that identity verification cannot use SSN,
and that one must separately opt in to credit checks than to id verification.

~~~
chii
> service is, say, a water utility

If you need to pay using a credit card then it makes sense that you must get
your credit checked.

But there are always alternative payment methods that don't involve credit
(like pay by cash). If you truly do not want to consent to having a credit
history, you can avoid it.

~~~
syrrim
The way utilities work is equivalent to a credit card: you use the service
over the course of a month/year, then at the end you pay for what you used.
This is a form of debt. If you could pay at the atart, this would be
alleviated, but you don't know how much you will use at the start. I'm sure
there are various other solutions, but none as simple as verfiying credit
history, then waiting to charge until the end of the period.

~~~
Casseres
A solution that is as simple: Pay a deposit.

If you don't pay the bill, they use your deposit and terminate your service.

My current ISP didn't even ask for a deposit. I just visited one of their
storefronts so they could check my ID to verify my name.

~~~
nmcfarl
In the past I was with an ISP that didn’t allow overages, so monthly bills
were predictable. They required 1 months payment as a deposit up front and ran
a credit check. The only alternative was dial up.

Just because someone isn’t giving you credit and never will doesn’t mean they
won’t want your credit details. Nor that you will have leverage to refuse.

~~~
Casseres
Credit check and deposit? Since they had no competitor, I guess they could get
away with it.

Yes, some companies are rotten, but some do provide just as simple ways to get
service without a credit check.

> but none as simple as verfiying credit history

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jfim
> To settle the SEC’s civil charges, Bonthu has agreed to a permanent
> injunction and to return his allegedly ill-gotten gains plus interest.

It doesn't seem very dissuasive to only have to return the ill-gotten gains
for insider trading, as it makes the returns of such trading positive if not
all insider traders are caught.

~~~
posixplz
A permanent injunction is a pretty big deal. I didn't want to spend the time
finding the actual court filing corresponding to this press release, but 99%
of the time, a "permanent injunction" in this context means a lifetime ban
from the sale or offering of securities. Not such a big deal for the average
Joe Sixpack, but in tech, where we're often paid in RSUs, options, and grants,
it's a huge deal. Plus, there's the felony criminal record that will dissuade
employers that aren't publicly traded.

~~~
donald123
Isn't the settlement with SEC to avoid the criminal record? Besides it's
supposed to be a civil charge by SEC.

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JumpCrisscross
> _Isn 't the settlement with SEC to avoid the criminal record?_

No. The SEC is a civil agency which brings civil actions. Settling with the
SEC does not prohibit the DoJ, or any state enforcement agency, from bringing
criminal charges.

~~~
donald123
OK, make sense, just found out on the SEC website. So there won't be a
criminal record before DOJ or local AGs place charges.

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iaw
I would like to see sentencing (probationary or prison) for financial crimes
correspond to the amount of time it would take the median American to earn the
amount of illicit proceeds.

So if someone makes $5M illegally their penalty would be 5x greater than that
of someone that made $1M illegally and both would vary in proportion to how
many years of someone's life that represents.

~~~
idoh
There are many reasons for punishment, like retribution, deterrence, and
rehabilitation. Your proposal sorta makes sense on the retribution angle, but
is grossly excessive for rehabilitation and deterrence. On the deterrence
side, once someone has racked up, say, 50 years, there is no reason to stop
because they will not really get punished further.

~~~
rhizome
Rehabilitation has not been a component of US sentencing policy for over 40
years.

~~~
idoh
Fair point - it is a theoretical rationale for punishment but not done in
practice so I should have omitted it.

~~~
munk-a
I think it's fair to idealistically include it, it is one of the three
theoretical goals. I personally think deterrence is the most vital goal of
punishment but I think modern society is just concerned with retribution...
especially with our "It's easier to ask forgiveness than permission"
philosophy of late.

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_bxg1
This feels like a sacrificial lamb, to distract from the upper-level
executives who made orders of magnitude more.

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adreamingsoul
This sounds like he was thrown under the bus, probably to distract the SEC
from investigating the executives who allowed corrupt business practices to
continue.

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orbitingpluto
I'm flabbergasted by how miniscule his investment was. 3500% return on $2k.
Did he think it was too small to fly under the radar? Or is he small enough to
prosecute?

~~~
orbitingpluto
Ugh. Me talk bad. You know what meant.

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digitaltrees
I haven’t looked in a while so please correct me if I am wrong. But wasn’t
there a report that the CTO did the same thing but was cleared? This seems
like a much lower level manager.

~~~
g051051
The global CIO resigned, but was never investigated or charged that I'm aware
of. The CIO of the U.S. business unit was tapped to be the new global CIO, but
he was fired for alleged insider trading, and then charged by the SEC.

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walrus01
This low level guy gets punished, but the C level executives who let the
system get so shoddy it resulted in the massive breach, they get nothing but a
slap on their wrists.

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NoPicklez
How is it that one guy can be punished for insider trading, yet the executives
responsible for exposing the business to one of the largest data breaches in
history get off with just a slap on the wrist.

Ignorance or negligence behavior when it comes to implementing and maintaining
cyber security controls over PPI is not good enough, and the culture needs to
change.

~~~
Maarten88
I think the implicit cultural rule is, you can exploit anyone who stands lower
on the society ladder, but you cannot cut into the profits of people more
powerful. Thus insider trading is punished, breaching millions sensitive
consumer records is not.

This is probably not going to change anytime soon, it goes much deeper than
maintaining security.

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donald123
Would be hard to discover if he uses his wife or relative's accounts to trade,
right?

~~~
refurb
This is why people get busted for insider trading so often. They thing
obscuring the purchase _slightly_ will get the SEC off their tracks. Nope.

Even if you had a long-lost friend do it, the big trigger is the purchase
itself. Someone buys no options in the past 5 years, suddenly buys a ton of
out-of-the-money call options 2 days before a merger. The SEC zeros in on that
like a laser.

Then they look at who purchased it. Any connection to the company that
acquired/was acquired? No? Do they know anyone who is? Let's get their phone
records.

I also think the SEC knows they can't police every transaction, so the ones
that are flagged get investigated hard, to make an example of them.

If you really wanted to obscured it, one way would be to have a trail of
purchases such that the "big one" doesn't look out of place. However, that
would mean you'd need to make a bunch of losing bets.

~~~
donald123
How about transactions made by non-residents, like people trading from outside
US. They can transfer out the fund long before SEC can get to it and conclude
the investigation.

~~~
deltateam
ha hah aha no.

The regulatory system relies on leveraging financial institutions such as the
brokers themselves to do the snitching.

So they may voluntarily freeze funds. But even if they don't there is another
layer:

Administrative law judges.

These are employees at the federal agencies that are imbued with the power of
the judicial branch and rubber stamp injunctions and "emergency asset freeze"
orders from their bosses. And by boss I mean the private sector such as FINRA.

So typically the funds get frozen AND the SEC files charges against non-
residents. They can get you in most places on the planet, and also wait till
you go on vacation to most places on the planet.

~~~
donald123
that's only ability in theory. Besides I don't think SEC can "get you in most
places on the planet". First they are only a civil agency and it would be a
civil charge. Second, they cannot easily get you in most places, and they
won't spend the effort and money to do that even if it becomes criminal
charge.

~~~
deltateam
they often co-file with the department of justice to get the criminal charges

secondly the indictments leverage financial institutions as well as other
federal agencies to be notified when a person - even foreign - is in their
grasp or has known whereabouts

SEC indictments are often pretty ballsy. I read one where they indicted people
in Eastern Europe who only traded on a CFD exchange. CFD exchanges don't exist
in the United States. But the SEC said the traders should have known that the
CFD broker would have made actual trades in the US equities markets due to
their actions so therefore they have to answer for it.

What became of that? Maybe nothing just like you said

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desireco42
Of all the people to end in jail, this minor guy is the one? He clearly is not
some major criminal but small opportunist.

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rhizome
Google a thing called "Fallacy of relative privation." Large crimes do not
excuse smaller ones.

~~~
tawy1031
I believe the GP is making reference to the Equifax executive that sold a lot
of stock right before the announcement of the data breach.

~~~
rhizome
We don't disagree.

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deltateam
> Bonthu sold the put options and netted more than $75,000, a return of more
> than 3,500 percent on his initial investment.

who doesn't love options am I right?

any other delta or gamma chasers here

