On July 23, 2018, Sudhakar Reddy Bonthu (“Bonthu”), a 44-year-old former software development manager at Equifax Inc. (“Equifax”), pled guilty to a single count of insider trading in the Northern District of Georgia. Bonthu is accused of leveraging his inside information about the credit reporting company’s massive data breach to earn over $70,000.
Equifax first learned of the breach in late July/early August of 2017, and gradually realized that approximately 148 million U.S. consumers were at risk of having their names, Social Security numbers, addresses, and birth dates compromised.
On August 25, 2017, Bonthu was given an assignment to develop an online user interface for a client with a “go live” deadline of September 6. Bonthu was asked to use Equifax-designed breach remedies to construct a way for customers to determine if they were at risk. He also learned that the breach had affected more than 100 million people while working on the project.
Upon concluding that Equifax was the victim of the breach, Bonthu used his wife’s brokerage account to purchase 86 Equifax common stock options before the breach was publicly announced. He exercised the options within a day of the public announcement, and as Equifax’s stock price fell approximately 14 percent, Bonthu increased his initial $2,166 investment to $77,333.
According to the U.S. Securities and Exchange Commission, Equifax fired Bonthu in March 2018 when he failed to cooperate with an internal investigation surrounding his potential violation of its internal trading policy. He is scheduled to be sentenced before U.S. District Judge Amy Totenberg on October 18.
The Federal Bureau of Investigation stated in a press release that “Our message with case is simple – company insiders must follow the same rules that govern regular investors, otherwise the public’s confidence in the stock market erodes…If they don’t, the FBI and its federal partners are determined to investigate them and hold them accountable.”
Bonthu is one of the two former Equifax employees accused of using confidential information to profit from the data breach. Equifax’s former Chief Information Officer for U.S. Information Solutions, Jun Ying, has plead not guilty in a case that is still pending.
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Kochman, Ben. “Former Equifax Engineer Pleads Guilty To Insider Trading.” Law 360. Last modified on July 23, 2018.