Senators Urge SEC, DOJ, & FTC to Investigate Equifax Stock Sales Following Data Breach
Led by Reed-Kennedy, bipartisan letter calls on federal agencies to investigate possible insider trading of Equifax securities
WASHINGTON, DC - A bipartisan group of 37 U.S. Senators led by Jack Reed (D-RI) and John Kennedy (R-LA) today asked the Securities & Exchange Commission (SEC), the Department of Justice (DOJ), and the Federal Trade Commission (FTC) to investigate the sale of nearly $2 million in Equifax securities held by high-level Equifax executives shortly after the company learned of a massive cybersecurity breach.
Equifax, a major consumer credit reporting agency, recently disclosed that unauthorized parties had obtained sensitive information - such as Social Security numbers, addresses, and driver’s license numbers - for as many as 143 million people. The breach is believed to have occurred in May and was discovered internally by Equifax in late July. Within days of Equifax’s internal discovery of the breach, three top level Equifax executives - the Chief Financial Officer; the President of U.S. Information Solutions; and the President of Workforce Solutions - sold large amounts of their shares of Equifax stock, though its customers and the public were not notified until September 7.
Equifax has stated that the three executives were not notified of the breach when they sold shares and exercised options.
In their letter, the Senators expressed concern about potential insider trading violations: “As part of your investigations, we request that you conduct a thorough examination of any unusual trading, including any atypical options trading, for violations of insider trading law. To the extent that your investigations uncover any information regarding whether Equifax management employed reasonable measures to ensure the security of the now compromised data prior to this cyber breach, we would appreciate your sharing these details.”
The 37 Senators also wrote: “We request that you spare no effort in your investigations and in enforcing the law to the fullest extent against anyone who is found to be at fault.”
In addition to Reed and Kennedy, the letter was signed by Senators Tammy Baldwin (D-WI), Dean Heller (R-NV), Richard Blumenthal (D-CT), Susan Collins (R-ME), Cory Booker (D-NJ), Sherrod Brown (D-OH), Bob Casey (D-PA), Catherine Cortez Masto (D-NV), Richard Donnelly (D-IN), Richard Durbin (D-IL), Dianne Feinstein (D-CA), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Maggie Hassan (D-NH), Kamala Harris (D-CA), Heidi Heitkamp (D-ND), Angus King (I-ME), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Joe Manchin (D-WV), Edward Markey (D-MA), Claire McCaskill (D-MO), Bob Menendez (D-NJ), Jeff Merkley (D-OR), Patty Murray (D-WA), Bernard Sanders (I-VT), Brian Schatz (D-HI), Jeanne Shaheen (D-NH), Jon Tester (D-MT), Tom Udall (D-NM), Chris Van Hollen (D-MD), Mark Warner (D-VA), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR).
The full text of the letter follows:
September 12, 2017
Dear Chairman Clayton, Attorney General Sessions, and Acting Chairman Ohlhausen:
We write to request that the Securities and Exchange Commission, the Department of Justice, and the Federal Trade Commission investigate disturbing reports that senior Equifax executives sold more than $1.5 million in Equifax securities within days of a cybersecurity breach that may have compromised the personal information, including Social Security numbers, of as many as 143 million Americans. In addition, there are reports that Equifax “also lost control of an unspecified number of driver’s license numbers, along with the credit card numbers for 209,000 consumers and credit dispute documents for 182,000.”
As part of your investigations, we request that you conduct a thorough examination of any unusual trading, including any atypical options trading, for violations of insider trading law. To the extent that your investigations uncover any information regarding whether Equifax management employed reasonable measures to ensure the security of the now compromised data prior to this cyber breach, we would appreciate your sharing these details.
We request that you spare no effort in your investigations and in enforcing the law to the fullest extent against anyone who is found to be at fault.
We thank you for your consideration, and we request periodic updates on your progress.
A PDF of the letter can be viewed here.