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Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

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Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#41

Post by crispyporkbites »

gene91 wrote: post #26

If you guessed that your employer may be in trouble and then sold stock, is that considered insider trading? Let's say, you are in charge of security. The CEO is never interested in your work. One day, you got an invitation to meet with the CEO. You sold all your stock before you go to the meeting (based on a guess that something bad might have happened). Is that illegal? Is the meeting invite considered material non…

Can you prove whether you guessed or knew something only an insider would have known?

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#42

Post by tlrobinson »

gene91 wrote: post #26

If you guessed that your employer may be in trouble and then sold stock, is that considered insider trading? Let's say, you are in charge of security. The CEO is never interested in your work. One day, you got an invitation to meet with the CEO. You sold all your stock before you go to the meeting (based on a guess that something bad might have happened). Is that illegal? Is the meeting invite considered material non…

I'm not a lawyer, but I expect that would depend on if you were aware of non-public information that could affect that decision.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#43

Post by lowdest »

gene91 wrote: post #26

If you guessed that your employer may be in trouble and then sold stock, is that considered insider trading? Let's say, you are in charge of security. The CEO is never interested in your work. One day, you got an invitation to meet with the CEO. You sold all your stock before you go to the meeting (based on a guess that something bad might have happened). Is that illegal? Is the meeting invite considered material non…

The SEC has rules for what constitutes legal and illegal insider trading: https://www.sec.gov/fast-answers/answersinsiderhtm.html

Generally though, the rules don't disallow average employees from guessing about the future stock price. It becomes illegal insider trading if somehow you had obtained material non-public information to make the decision.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#44

Post by NaturallyMade »

intopieces wrote: post #22

If insider trading laws didn't exist, would we have known that something was wrong more quickly? Are high-volume trades from executives public? It seems to me that insider trading laws mean people take every step to keep bad things about a company secret, which is not good for consumers.

All executive (officer) trades are public. You can typically find it on a companies investor relations website.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#45

Post by bigtunacan »

Coding_Cat wrote: post #24
21 wrote: post #14

Earlier quoted context omitted.

> The finance dudes get a clean bill of health, and the tech guy gets thrown to the feds. Maybe the finance dudes are not so retarded to sell their stock immediately after one of the biggest data leaks in history with no ahead of time sell plan, and after googling what was the impact on the stock price of another data leak. Pretty bad op-sec for a tech guy. Or maybe he's just financially clueless, and doesn't know th…

Maybe the finance guy noticed the CIO putting in a huge sell option and figured "he might know something, better join in" and this caused the others to follow suit.

That would still constitute insider trading.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#46

Post by TomK32 »

currymj wrote: post #39
TomK32 wrote: post #17

Earlier quoted context omitted.

To avoid this couldn't an exec announce their intention to sell as public and early as possible and cite "divorce/third house/mega yacht" as the reason for the sale?

Lou Pai famously sold his Enron stock in a divorce settlement, after his wife left him because of an affair with a stripper. He got away with $280 million and no insider trading charges. He and the stripper are now married and spend their time training dressage horses.

You gotta love that happy end.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#47

Post by sokoloff »

gene91 wrote: post #26

If you guessed that your employer may be in trouble and then sold stock, is that considered insider trading? Let's say, you are in charge of security. The CEO is never interested in your work. One day, you got an invitation to meet with the CEO. You sold all your stock before you go to the meeting (based on a guess that something bad might have happened). Is that illegal? Is the meeting invite considered material non…

The mere fact of meeting invite, standing alone (no other information that you had, innocuous subject line, etc), would be non-public, but would probably not be found to be material.

However, if you're the Equifax CSO and the CEO is never interested in your work, you might want to sell your shares as soon as they vest anyway.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#48

Post by mannykannot »

rossdavidh wrote: post #11

"Three Equifax Inc. senior executives -- Chief Financial Officer John Gamble, and unit presidents Joseph Loughran and Rodolfo Ploder -- sold shares worth almost $1.8 million in the days after the company discovered the breach. Equifax has said those three executives had not been informed of the incident when they initiated the sales." While I'm not sympathetic to the U.S. CIO named in this article, I find it somewhat…

The new, tacit paradigm is that to earn big bucks you have to "do what needs to be done" while preserving executive deniability. This is a big part of the reason why no big fish were even threatened with prosecution in response to 2008. This style of management is a response to the prosecution of Enron executives, and the jailing of Milken after the 1987 crash, and it resembles the Mafia's omerta.

Galling as it may seem, the way to combat this is the same as with the Mafia: you have to go after the mid-level people who facilitate it. In this particular case, the CIO is going to have a particularly hard job denying that he knew something was up, even if he had tried to maintain a veneer of ignorance. The best he (and we) can hope for now is for him to cooperate, and help uncover any evidence there is showing the others did know.

Re: Equifax CIO Put ‘2 and 2 Together’ Then Sold Stock, SEC Says

#49

Post by mannykannot »

21 wrote: post #14
rossdavidh wrote: post #11

"Three Equifax Inc. senior executives -- Chief Financial Officer John Gamble, and unit presidents Joseph Loughran and Rodolfo Ploder -- sold shares worth almost $1.8 million in the days after the company discovered the breach. Equifax has said those three executives had not been informed of the incident when they initiated the sales." While I'm not sympathetic to the U.S. CIO named in this article, I find it somewhat…

> The finance dudes get a clean bill of health, and the tech guy gets thrown to the feds. Maybe the finance dudes are not so retarded to sell their stock immediately after one of the biggest data leaks in history with no ahead of time sell plan, and after googling what was the impact on the stock price of another data leak. Pretty bad op-sec for a tech guy. Or maybe he's just financially clueless, and doesn't know th…

>Pretty bad op-sec for a tech guy.

In general, security does not seem to be his strong suit.

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