Sudhakar Reddy Bonthu, a former software developer at Equifax, was criminally charged for allegedly making a profit through using confidential information entrusted to him by the company to determine if it had suffered a data breach, but before the information became public.
The charges announced Thursday concern Bonthu’s trading in shares options of Equifax in 2017, just a few days before the credit-reporting agency announced that 148 million Americans had their personal information accessed, including social security numbers, driver’s licenses, and credit card numbers.
The breach led to the ousting of Equifax’s senior managers including CIO and CSO, and shortly thereafter also its CEO.
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The U.S. attorney’s office in Atlanta brought the insider trading case against Bonthu who worked as software development manager for Equifax’s US business unit in that timeframe. Federal prosecutors say he used his wife’s brokerage account to buy put options in Equifax stock, which allowed him to gain when the stock price dropped.
On September 7, Equifax’s stock price fell as a result of its data breach announcement, while Bonthu exercised all of his vested stock options, reaping proceeds of nearly $75,000.
According to the complaint, the former executive is accused of violating federal laws by using knowledge of nonpublic events related to certain securities.
Bonthu isn’t the only Equifax executive to have made suspiciously timed trades. Last year, Equifax said it tipped off the US regulators alleged insider trading after it had instituted a special trading blackout for everyone participated in a breach response program and crisis response team. The authorities opened a criminal investigation against three senior executives who were accused of violating insider trading laws before the breach was disclosed.