Dozens of Senators Seek Probe of Equifax Executives’ Stock SalesBy
Republicans, Democrats urge SEC and DOJ to probe executives
Lawmakers’ letter requests review of any ‘unusal’ trades
More than one-third of U.S. senators want the Securities and Exchange Commission and the Department of Justice to get to the bottom of whether Equifax Inc. managers violated insider trading laws when they sold stock days after the company found out it was hacked.
Thirty-six lawmakers, consisting of mostly Democrats and some Republicans, signed letters sent to the agencies and the Federal Trade Commission Tuesday. The bipartisan request shows the degree of public outrage over a cyber breach that may have led to the theft of 143 million Americans’ personal data -- and how it is reverberating in Washington.
The stock sales in question involve Equifax Chief Financial Officer John Gamble, President of U.S. Information Solutions Joseph Loughran and President of Workforce Solutions Rodolfo Ploder. The executives unloaded shares worth almost $1.8 million just days after the company discovered a security breach on July 29. Equifax publicly disclosed the hack six weeks later and has repeatedly said the managers didn’t know of the breach at the time they sold shares.
“We request that you conduct a thorough examination of any unusual trading, including any atypical options trading, for violations of insider trading law,” the senators, led by Rhode Island Democrat Jack Reed and Louisiana Republican John Kennedy, wrote in the letter. “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.”
When asked by reporters Wednesday about the mounting congressional pressure for the SEC to investigate, Chairman Jay Clayton declined to comment on Equifax and whether the agency was looking into the executives’ trades. Clayton said the SEC is working to increase public awareness of the “substantial systemic risks” associated with cybersecurity.
The Justice Department didn’t respond to an email seeking comment.
U.S. Senator Mark Warner, a Virginia Democrat, separately asked the FTC Wednesday to probe whether Equifax and its competitors have adequate cybersecurity safeguards to protect “the enormous amounts of sensitive data they collect and commercialize.” Warner also was among senators who signed the letter urging insider-trading investigations.
The information compromised in the Equifax hack includes Social Security numbers, drivers license records and birth dates. The company is among a handful of firms that control data such as credit histories that banks rely on to issue loans.
FTC Acting Chairwoman Maureen Ohlhausen told journalists Tuesday that her agency is looking closely at the Equifax matter, though she stopped short of saying it has opened a formal probe.
The latest investigation requests are part of a growing backlash on Capitol Hill that Equifax is struggling to contain.
At least six congressional committees are examining the breach, scrutinizing how it happened and why Equifax waited more than a month to disclose it. Lawmakers are also using the hack to push policy goals, such as calling for stiffer requirements on how companies handle consumer data and the removal of barriers consumers face in suing financial companies.
Regulators are looking closely at Equifax. The Consumer Financial Protection Bureau, which has the authority to monitor credit-reporting companies and go after firms that fail to protect consumers, said it is looking into the breach and how the company has responded.
Investors are worried about the data breach as well, causing the stock to plunge in the days since the debacle became public. Shares of Equifax fell nearly 15 percent on Wednesday to $98.99, the biggest drop since 1999. The company was the worst performer in the S&P 500 Index.
— With assistance by David McLaughlin, Benjamin Bain, and Steven T. Dennis