Sudhakar Reddy Bonthu, a former manager at Equifax, pleaded guilty July 23, to a charge of insider trading based on his purchases of options ahead of Equifax’s public announcement of its data breach.
The 44-year old Indian-American from Atlanta, Georgia is scheduled to be sentenced on October 18, before U.S. District Judge Amy Totenberg.
This case continues to be investigated by the Federal Bureau of Investigation, with assistance from the U.S. Securities and Exchange Commission, according to a press release from the U.S. Attorney’s Office from the Northern District of Georgia.
“Bonthu was privy to nonpublic information pertaining to Equifax’s data breach, and he violated the law when he used that knowledge to enrich himself,” U.S. Attorney Byung J. “BJay” Pak, is quoted saying in the press release. “Our office will continue investigate and prosecute those who take advantage of their positions for illegal gain,” Pak added.
Equifax Inc., the consumer credit reporting agency headquartered in Atlanta, experienced a massive data breach where Social Security numbers, birth dates, and addresses of over 145 million consumers were acquired by hackers during the summer of 2017.
According to U.S. Attorney Pak, the charges, and other information presented in court, Bonthu was a software development manager for Equifax’s Global Consumer Services team in August 2017, and he was entrusted with information that resulted in him concluding that Equifax was the victim of a data breach.
On Aug.25, 2017, Bonthu and other Equifax employees were asked to assist in responding to the breach, although he was not directly informed that Equifax had been breached. On the same day Bonthu was informed that the target date for announcing the breach publicly was September 6, 2017, the press release says.
Around Aug. 30, Bonthu learned that at least 100 million individuals’ information was exposed as part of the breach and that the data included names and Social Security numbers, authorities note in the press release. The next day, Bonthu received an email related to his work on the breach with a file attached named “EFXDatabreach.postman_collection.” “EFX” is the stock ticker symbol for Equifax.
On September 1, 2017, Bonthu bought 86 put options in Equifax stock that expired on September 15, 2017. Those put options allowed him to profit if the value of Equifax stock dropped within that two-week period. Equifax publicly disclosed the data breach on September 7, 2017, and its stock fell the next day. Bonthu then exercised his put options, realizing a profit of more than $75,000, court papers sourced in the press release say.