Ex-Equifax manager gets home confinement for insider trading
By The Associated PressNews Data Security data breach equifax insider trading
ATLANTA — A former Equifax manager was sentenced Tuesday to serve eight months home confinement for engaging in insider trading in the wake of the company's massive data breach last year.
Sudhakar Reddy Bonthu, who worked as a software product development manager for the Atlanta-based credit-reporting agency, had pleaded guilty in July. U.S. District Judge Amy Totenberg also ordered Bonthu to pay a US$50,000 fine, to serve 50 hours of community service and to forfeit the proceeds he gained from insider trading.
Born in Andhra Pradesh, India, Bonthu, 44, has lived in the United States since 2000. But he is not a U.S. citizen and faces possible deportation as a result of his felony conviction.
Hackers who haven’t been identified accessed Equifax databases without authorization from mid-May through July in 2017 and obtained customers’ personal information. Federal authorities say Equifax discovered the suspicious activity on its network on July 29, 2017.
The company ultimately revealed that the information of nearly 150 million Americans was exposed.
Bonthu and other Equifax employees were asked on Aug. 25, 2017, to help respond to the breach, but were told the work involved a potential Equifax customer, not Equifax itself, prosecutors have said.
Bonthu knew the target date for announcing the breach was Sept. 6. Bonthu used his wife’s brokerage account on Sept. 1 to buy 86 put options in Equifax stock that expired Sept. 15 for about $1,300, prosecutors said. Put options allow the holder to make a profit if the stock price drops.
After the share value plunged when the breach was publicly disclosed on Sept. 7, 2017, Bonthu exercised his put options and made a profit of about $75,000.
Bonthu also faced civil charges from the Securities and Exchange Commission and settled that case in July.
Another former Equifax employee also faces insider trading charges related to the breach. Jun Ying, former chief information officer of Equifax’s U.S. Information Solutions, was indicted in March. He has pleaded guilty and his case is pending. He also faces civil charges of insider trading from the SEC.
Equifax Chief Financial Officer John Gamble and three other executives sold shares worth a combined $1.8 million days after Equifax discovered suspicious activity on its network, but Equifax said an independent committee determined that these executives did not know of the breach when their trades were made.
Bonthu’s wife, addressing the judge during the sentencing hearing, questioned why her husband was being punished when top executives were not.
“He’s just a small fish in this whole game,'” Rekha Vummadi said.
Bonthu also addressed the judge, saying he accepted responsibility for his actions and that he was sorry to Equifax stakeholders and to his family.
Totenberg said she had reviewed Bonthu’s history and read letters submitted by his family and former colleagues. Bonthu is clearly very intelligent and has contributed to his community and worked hard to build a good life for his family in this country, she said.
“I don’t know what got into you on this one occasion,” she said and speculated that Bonthu had suffered from the “infection of capitalism.”
Totenberg noted that perhaps the most serious consequence Bonthu faces — possible deportation — is something over which she has no control. With an eye toward potential immigration proceedings, she said for the record that she doesn’t see any evidence of moral turpitude, which can be grounds for deportation.
— Kate Brumback
News from © Canadian Press Enterprises Inc. 2018
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