March 16, 2018

Warren Presses Equifax on Senior Executive Charged with Insider Trading

Allegation Follows Equifax's Failure to Provide Timely and Complete Information about Massive Breach

Text of letter (PDF)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) sent a letter to Equifax's interim Chief Executive Officer Paulino do Rego Barros Jr. about the Securities and Exchange Commission's (SEC) announcement that it has charged Jun Ying, a former Equifax chief information officer, with insider trading. Mr. Ying allegedly used confidential information about Equifax's recent data breach to exercise stock options and secure a massive personal profit. Senator Warren highlighted Equifax's failure to prevent the breach, its botched response, and its inability to provide Congress or the public with timely and complete information. She asked Barros to provide a full accounting of Equifax's knowledge of and actions in response to Mr. Ying's trading activities.

This is not the first time that insider trading by Equifax executives has been raised in relation to the breach. On November 3, 2017, Equifax released a Board of Director's Special Committee report addressing concerns about insider trading by four senior Equifax officials. The Committee ultimately concluded that none of the four executives had engaged in insider trading. However, there was no mention in this report, or any subsequent press releases, investigative reports, senior executive statements made by Equifax or other information provided to Congress and the public about any other senior executive who might have engaged in insider trading.

Senator Warren noted that either the company's extensive investigation did not reveal Mr. Ying's activities - or it did, but the company did not disclose this information. "It is troubling that there are new charges of insider trading against a senior Equifax official - four full months after the release of your company's Special Committee report on insider trading. Given this revelation, I have significant concerns about the adequacy of your company's internal fraud detection procedures and recent investigations," wrote Senator Warren. "I am also concerned with your company's possible failure to disclose important information to Congress and the American people about actions taken by senior executives in response to the Equifax breach."

On March 14, 2018, the SEC alleged that Jun Ying, who was next in line to become the company's global Chief lnformation Officer, learned of the company's response to the breach before it became public and used this confidential information to time the sale of his own stock options. In late August, days before Equifax made the breach public, Mr. Ying allegedly "exercised all of his vested Equifax stock options and then sold the shares, reaping proceeds of nearly $1 million... [which caused him to avoid] ...more than $117,000 in losses."

Senator Warren called on Equifax to provide answers on the company's knowledge of and response to Mr. Ying's actions and to clarify the extent and impact of the data breach to Americans and their senior executives by no later than March 29, 2018.