A former Equifax executive has been charged with insider trading related to the company's massive breach last year.
The Securities and Exchange Commission announced on Wednesday that it filed the charge against Jun Ying, a former chief information officer with Equifax's US branch. He was next in line to be the company's global CIO before he was fired over the breach.
Last September, Equifax announced that it suffered a data breach that would affect more than half of the US population, exposing the Social Security numbers, names and addresses of 147 million Americans. The company learned about the breach on July 29, 2017, but did not announce it publicly for nearly three months.
Before the public knew about the breach, three executives, including the company's chief financial officer, sold shares worth nearly $1.8 million. Equifax said that executive trio, which didn't include Ying, didn't know about the breach.
But Ying, the SEC maintains, allegedly used information about the breach in making his decision on Aug. 28, 2017 to sell shares in Equifax, making more than $950,000. Ying's alleged insider trading happened 10 days before Equifax publicly announced its breach. If he had sold those same shares after the breach was announced, he would have made $117,000 less.
"As alleged in our complaint, Ying used confidential information to conclude that his company had suffered a massive data breach, and he dumped his stock before the news went public," Richard R. Best, the SEC's Atlanta branch director, said in a statement.
The US Attorney's office in Georgia also filed criminal charges against Ying on Tuesday.
"This defendant took advantage of his position as Equifax's USIS Chief Information Officer and allegedly sold over $950,000 worth of stock to profit before the company announced a data breach that impacted over 145 million Americans," U.S. Attorney Byung J. Pak said in a statement.
According to court documents, Equifax executives initially hid the breach from staffers working on the response, including Ying. They disguised it as a "breach opportunity" for an outside company.
But by Aug. 25, 2017, Ying was allegedly in the know. On that day, prosecutors say he sent a text to a co-worker alluding to the security issue they were were working on: "Sounds bad. We may be the one breached... starting to put 2 and 2 together."
Three days later, at about 10 a.m., Ying, used Bing on an Equifax computer to search the following: "Experian breach," "Experian stock price 9/15/2015," and "Experian breach 2015." He sold his stock less than an hour after his Bing searches, according to court documents.
This happened after internal emails were sent to employees from July 25 and Aug. 15, reminding staffers they couldn't trade if they were aware of the breach. When Equifax lawyers officially informed Ying about the breach on Aug. 30, two days after he already sold his shares, they told him that he should "not trade in Equifax securities," according to the SEC's complaint.
Ying didn't tell the company he sold his shares until after Sept. 15, when he was offered the position of global CIO, according to he court documents. Equifax fired Ying on Oct.16, after an internal investigation into his trading.
First published at 8:03 a.m. PT.
Updated at 9:14 a.m. PT: Adds details from the criminal complaint and SEC court documents.
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