Former Equifax Manager Charged With Insider Trading
Litigation Release No. 24183 / July 2, 2018
Securities and Exchange Commission v. Sudhakar Reddy Bonthu, Civil Action No. 1:18-cv-03114-MLB (ND Ga Filed June 28, 2018))
This past week, the Securities and Exchange Commission charged a former Equifax manager with insider trading in advance of the company’s September 2017 announcement of a massive data breach that exposed Social Security numbers and other personal information of approximately 148 million U.S. customers. This is the second case the SEC has filed arising from the Equifax data breach. In March, the former chief information officer of Equifax’s U.S. business unit was charged with insider trading.
In a complaint filed in federal court in Atlanta, the SEC charged that Equifax software engineering manager Sudhakar Reddy Bonthu traded on confidential information he received while creating a website for consumers impacted by a data breach.
According to the complaint, Bonthu was told the work was being done for an unnamed potential client, but based on information he received, he concluded that Equifax itself was the victim of the breach. The SEC alleges that Bonthu violated company policy when he traded on the non-public information by purchasing Equifax put options. Less than a week later, after Equifax publicly announced the data breach and its stock declined nearly 14 percent, Bonthu sold the put options and netted more than $75,000, a return of more than 3,500 percent on his initial investment.
Bonthu, 44, was terminated from Equifax in March after refusing to cooperate with an internal investigation into whether he had violated the company’s insider trading policy.
In a parallel proceeding, the U.S. Attorney’s Office for the Northern District of Georgia filed criminal charges against Bonthu.
To settle the SEC’s civil charges, Bonthu has agreed to a permanent injunction and to return his allegedly ill-gotten gains plus interest. The settlement is subject to court approval.
The SEC’s investigation, which is continuing, has been conducted by Elizabeth Skola and Justin Jeffries. The litigation is being led by Shawn Murnahan and Graham Loomis. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of Georgia,Federal Bureau of Investigation, and Financial Industry Regulatory Authority.