Equifax Breach: Company Clears Executives For Selling Stock Before Hack Announcement

Equifax has cleared several of its executives of any wrongdoing after it was discovered they sold millions of dollars worth of company stock shortly after the company discovered it suffered a massive breach.

A special committee formed by the credit reporting firm’s board announced Friday the executives did not partake in insider trading when they sold stock totaling nearly $1.8 million prior to a catastrophic data breach being made public.

The breach was first discovered by Equifax on July 29, though it is believed that the hacker or hackers responsible for the attack had access to the company’s servers for several weeks prior to being spotted. The attack resulted in more than 145 million Americans having personal information, including social security numbers, stolen.

Just days after the breach was discovered, a number of Equifax’s executives began dumping large shares of company stock.

According to the special committee’s report, its investigation was intended to “pinpoint the date on which each of the four senior officers first learned of the security investigation that uncovered the breach and to determine whether any of those officers was informed of or otherwise learned of the security investigation before his trades were executed.”

Equifax’s chief financial officer, John Gamble, sold 6,500 shares of his stock in the credit bureau on Aug. 1. The investigation conducted by the special committee discovered Gamble had disclosed the sale with a financial advisor and intended to use the money from the sale to renovate his home. Gamble was informed of the breach on Aug. 10, according to the report.

The investigation also found Equifax’s President of Information Solutions Trey Loughran initially requested approval for the sale of 4,000 shares of his stock on July 28, one day before Equifax discovered it had suffered a breach. Loughran didn’t learn of the incident until Aug. 13.

Rudy Ploder, the President of Workforce solutions at the credit reporting firm, sold 1,719 shares of the company on Aug. 2 but investigators found the sale was to fund a move to a new city. Ploder supposedly did not know about the breach until Aug. 22.

Douglas Brandberg, the Senior Vice President of Investor Relations for Equifax, sold 1,724 shares of the company on Aug. 2 but didn’t learn of the breach until Aug. 22.

“None of the four executives had knowledge of the incident when their trades were made, that preclearance for the four trades was appropriately obtained, that each of the four trades at issue comported with Company policy, and that none of the four executives engaged in insider trading," the report from the special committee concluded.

The committee reportedly examined more than 55,000 documents—including emails and text messages—over the course of its investigation, in addition to conducting 62 in-person interviews to determine if any illegal trading took place.

While the executives were cleared of any wrongdoing in their sales of company stock, the decision allowed them to avoid a considerable drop in value. Equifax’s stock tanked following the breach being made public on Sept. 7, resulting in a nearly 35 percent drop in value in a matter of days.

Equifax is still conducting an investigation into the hack and the company’s response to it, which included failing to disclose the breach publicly for 40 days, launching a website that falsely identified if people were affected by the breach and offering an identity protection program that forced victims to agree to a forced arbitration clause that would prevent them from being able to join any class action lawsuits against the company.