A former chief information officer at American credit information provider Equifax has been charged with insider trading before the company revealed in September last year that it had suffered a massive data breach.
Jun Ying, who was next in line to be the company's global CIO, was charged by the US Securities and Exchange Commission on Wednesday with having allegedly used confidential information to conclude that his employer had suffered a data breach.
In September 2017, Equifax said it had discovered that details of 143 million American consumers had been leaked.
At that time, there were reports that three senior company executives had sold shares worth about US$1.8 million days after the breach was discovered on 29 July.
{loadposition sam08}In October, Equifax said the records of 15.2 million British clients were also stolen. A report last month said that the hack may be much larger than first feared and earlier this month the company identified another 2.4 million customers as being affected.
So here's the timeline:
— Ryan Mac (@RMac18) 7 September 2017
-Equifax discovers hack on July 29.
-Here are SEC listings of all share sales since then pic.twitter.com/gRTONbLac2
In a statement, the SEC said it was alleged that before the data breach was publicly disclosed, Ying exercised all of his vested Equifax stock options and then sold the shares, reaping proceeds of nearly US$1 million.
The complaint claims that by selling before public disclosure, he avoided more than US$117,000 in losses.
“As alleged in our complaint, Ying used confidential information to conclude that his company had suffered a massive data breach, and he dumped his stock before the news went public,” said Richard Best, director of the SEC’s Atlanta Regional Office.
“Corporate insiders who learn inside information, including information about material cyber intrusions, cannot betray shareholders for their own financial benefit.”
The US Attorney’s Office for the Northern District of Georgia announced parallel criminal charges against Ying on Wednesday.
The SEC complaint charges Ying with violating anti-fraud provisions of federal securities laws and seeks repayment of his gains plus interest, penalties, and injunctive relief.