The SEC has laid charges against three individuals for illegally trading Equifax (NYSE: EFX) shares prior to the company publicly revealing it suffered an extensive data breach.
Back in September 2017, Equifax announced that hackers gained access to the personal information of over 143 million Americans sometime between May and July, making it one of the biggest data breaches in American history. Once Equifax learned of the breach, the credit ratings agency hired a public relations company to help deliver the announcement to the public, as well as deal with the ensuing media inquires.
However, Ann Dishinger, who at the time was employed as a finance manager with the pubic relations company, informed her spouse, Lawrence Palmer, about the data breach prior to the news being made public. Palmer then told his former client about the upcoming announcement, who then lined up out-of-the-money Equifax put options with the agreement to split any ensuing profits from trading.
The SEC also alleged that Palmer made an identical deal with his brother and business partner, Jerrod Palmer, who also purchased the same out-of-money put options with his high school friend. Both Lawrence’s former client and his brother’s friend made profit upwards of $35,000 and $73,000, respectively, from the put options. Dishinger, along with the two brothers, were charged with violating the SEC’s anti-fraud and insider trading laws.
Information for this briefing was found via the SEC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.