Equifax executives did not commit 'insider trading,' committee finds

Dive Brief:

Four Equifax executives did not "engage in insider trading" before the company disclosed the data breach in September, according to a Special Committee report, formed by the Equifax Board of Directors. The committee is comprised of independent directors and is advised by an independent counsel.
The four executives, including the CFO, had no knowledge of the incident when they made the trades and "appropriately obtained" the preclearance for the transaction, according to the report. The trades also fell in line with Equifax policy for stock trading.
As part of the investigation, Equifax held dozens of interviews and reviewed more than 55,000 documents, including emails, text messages and phone logs, according to the report.

Dive Insight:

When Equifax disclosed the data breach at the beginning of September, two narratives took over the headlines: The breach exposed the highly-sensitive personal information of 143 million people — later revealed to be 145.5 million — and a number of high-ranking executives sold $1.8 million worth of company stock before the breach was revealed.

Many were quick to criticize the stock sale, however former CEO Richard Smith testified before Congress the executives had no knowledge of the breach at the time. Based on the timeline Smith gave to Congress, the stock sale happened around Aug. 1 or 2, and the full board of directors was not notified of the incident until the end of the month. A full timeline of events surround the breach is available here.

The committee's report also cleared the executives, however further investigations are likely considering the timing of the trade.

Equifax has an image problem. The last thing the company needed was additional criticism, considering the sheer number of people impacted by the breach. Following the breach revelations, confusion persisted about how Equifax was handling customer response, and lawsuits have mounted against the company. The FTC has publicly said it plans to investigate the breach, and class action lawsuits are certain to move forward.