The US Justice Department, along with the Securities and Exchange Commission, has charged a second former Equifax employee with insider trading, following the massive data breach that exposed the personal information of 146 million customers.
Sudhakar Reddy Bonthu, who worked as a software engineer at the credit reporting agency, has been charged with insider trading by the US Attorney's Office for the Northern District of Georgia.
Bonthu, 44, is the second Equifax employee to face federal criminal charges following the 2017 data breach. Jun Ying, a former CIO with the company, has also been indicted on insider trading charges. (See Former Equifax CIO Charged With Insider Trading.)
The data breach at Equifax has not only spawned a series of criminal investigations by federal prosecutors, but has also prompted lawmakers, as well as the SEC, to update rules and guidelines when it comes to cyberattacks and employees and executives who attempt to cash in on that knowledge before it's made public. (See Equifax, Intel Help Spur SEC to Update Cybersecurity Regulations.)
Last month, Equifax entered into an agreement with eight different states to change its security practices. (See Equifax Agrees to Implement New Security Measures.)
In the case of Bonthu, who worked as a software development manager for Equifax's Global Consumer Services, prosecutors charged that he and several others were told about a data breach in August 2017, but not that the incident was directly related to the company.
Later, Bonthu was told that breach did relate to Equifax, as well as the size and scope of the incident, and the company planned on announcing it to the public on Sept. 6, 2017.
On Sept. 1 of that year, Bonthu bought 86 "put options" in Equifax stock that would expire about 15 days later. Those options allowed Bonthu to make a profit if the price of Equifax dropped within two weeks, which it did after the Sept. 6 disclosure.
All told, Bonthu made a profit of about $75,000, according to the June 28 statements from the Justice Department and the SEC.
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"Bonthu allegedly took advantage of his position to profit while members of the public were unaware of the data breach at Equifax," US Attorney Byung J. "BJay" Pak, wrote in a statement.
After selling the stock, Bonthu, who lives in Atlanta, continued to work for the company until March when he was fired after refusing to cooperate in an internal probe, according to the SEC.
To settle the civil complaint with the SEC, Bonthu has agreed to pay back the money with interest, according to the statement. The criminal case led by the US Attorney's Office is ongoing.
— Scott Ferguson is the managing editor of Light Reading and the editor of Security Now. Follow him on Twitter @sferguson_LR.