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Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

bloomberg.com

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Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#111

Post by wsxcde »

ISL wrote: post #30
wsxcde wrote: post #26

Earlier quoted context omitted.

And are we expecting normal people to do key management?

I'm a normal person. My first attempt at key management was an utter failure, accidentally broadcasting a private key instead of the public one.

I'm a computer security researcher. At some point I posted a public key for people to send me encrypted email. Nobody ever did and at some point I lost that private key.

Point is, key management is hard problem for big corporations with dedicated IT staff. Relying on normal people to be able to do that is just insane.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#113

Post by ddeck »

ptero wrote: post #91
mathattack wrote: post #79

Earlier quoted context omitted.

From the article: Regulatory filings show that three days later, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of the filings lists the transactions as being part of 10b5-1 scheduled trading plans.…

Actually it is the state that has to prove mischief. They still enjoy presumption of innocence. I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.

>I agree the timing is suspicious

More so considering that prior to the sale John Gamble (the CFO) hadn't sold a single share in the three years that he has been with the firm.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#114

Post by ptero »

noobermin wrote: post #93
ptero wrote: post #91

Earlier quoted context omitted.

Actually it is the state that has to prove mischief. They still enjoy presumption of innocence. I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.

>high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational. You act as if this is a real senario and would have a non-negligible probability of occurring.

Depends on what one considers negligible. But I think govt attorneys made an example of Martha Stewart exactly to highlight the nonzero chances of jail if one, no matter how rich, ignores public securities laws.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#115

Post by RhodesianHunter »

wildmusings wrote: post #46
khuey wrote: post #42

Earlier quoted context omitted.

Intent doesn't need to be proven. If you knew of the material non-public information and you then decided to execute a trade you're guilty of insider trading.

It's not that clear cut. Otherwise, no one in the leadership of a company would ever be allowed to buy or sell stock.

That's precisely what scheduled sales via 10b5-1 plans are for. To schedule future and recurring stock sales to avoid this.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#117

Post by gehwartzen »

jdmichal wrote: post #14
korethr wrote: post #7

So, does this count as insider trading? My intuition says 'yes'. But my intuition about a thing and what the law says don't always match.

Insider trading is any trading performed using non-public knowledge. Theoretically even a pre-scheduled trade could be insider trading, if it relied on non-public knowledge which remained non-public until the time the trade executes. Of course, that's a pretty hard scenario to concoct, so generally pre-scheduled trades 3+ months out are considered safe for even high-level insiders. Not to mention all the extraneous m…

Doesn't there still have to be some judgement call? I would assume Insider Trading means trading on non-public knowledge that will significantly move the stock price, not just any old information that is not public. All kinds of employees have non public knowledge of things going on in a company that may or may not affect the stock price.

What would happen if a Executive found out about a data breach, sold some stock, but when the breach was announced later the stock price remained flat or went up (just for the sake of argument). Would that still be insider trading?

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#118

Post by adventured »

ddeck wrote: post #113
ptero wrote: post #91

Earlier quoted context omitted.

Actually it is the state that has to prove mischief. They still enjoy presumption of innocence. I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.

>I agree the timing is suspicious More so considering that prior to the sale John Gamble (the CFO) hadn't sold a single share in the three years that he has been with the firm.

That's incorrect. For example, Gamble sold $1.9 million worth of stock in May.

https://finance.yahoo.com/screener/insider/GAMBLE%20JOHN%20W...

http://www.nasdaq.com/quotes/insiders/gamble-john-w-jr-60842...

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#119

Post by jdmichal »

airza wrote: post #64
jdmichal wrote: post #14

Earlier quoted context omitted.

Insider trading is any trading performed using non-public knowledge. Theoretically even a pre-scheduled trade could be insider trading, if it relied on non-public knowledge which remained non-public until the time the trade executes. Of course, that's a pretty hard scenario to concoct, so generally pre-scheduled trades 3+ months out are considered safe for even high-level insiders. Not to mention all the extraneous m…

If all trades based on non-public knowledge were insider trading, the financial analysis industry would not exist

The financial analysis industry synthesizes its models from public knowledge.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#120

Post by jdmichal »

gehwartzen wrote: post #117
jdmichal wrote: post #14

Earlier quoted context omitted.

Insider trading is any trading performed using non-public knowledge. Theoretically even a pre-scheduled trade could be insider trading, if it relied on non-public knowledge which remained non-public until the time the trade executes. Of course, that's a pretty hard scenario to concoct, so generally pre-scheduled trades 3+ months out are considered safe for even high-level insiders. Not to mention all the extraneous m…

Doesn't there still have to be some judgement call? I would assume Insider Trading means trading on non-public knowledge that will significantly move the stock price, not just any old information that is not public. All kinds of employees have non public knowledge of things going on in a company that may or may not affect the stock price. What would happen if a Executive found out about a data breach, sold some stock…

You are correct. I was a little loose in my language, and should have said material non-public information. Material information is exactly what you describe: Information which would be reasonably expected to affect the market.
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