Three individuals have been charged with illegally tipping and trading in the securities of Equifax before its public announcement of a big cyber intrusion and data breach from 2017, the SEC reported.
The SEC filed a complaint that stated Equifax had engaged a public relation firm from Chicago to handle the inquiries from an announcement of the breach.
After that, Ann M. Dishinger, a finance manager with the PR firm, reportedly learned from the breach, tipping her significant other, Lawrence Palmer, about it even before it was public.
According to the SEC, Palmer reportedly contacted an ex-business client, arranging for that client to buy out-of-the-money Equifax put options in the client’s brokerage account. The understanding was allegedly that the profits would be split between Palmer and the client.
The report said Palmer’s brother, Jerrold Palmer, also contacted a friend asking them to buy the same put options in the friend’s brokerage account, also agreeing to split profits.
The scheme reportedly netted the Lawrence’s former client and Jerrold’s around $35,000 and $73,000 respectively, which were shared with the Palmer brothers.
Dishinger and the two Palmer brothers are now being charged, the SEC wrote.
Equifax was also in the news at the time for providing inaccurate credit scores for millions of Americans looking for loans in the spring, PYMNTS wrote.
Equifax reportedly sent the scores to banks and nonbank lenders, as people were applying for things like car loans, credit cards and mortgages.
The lenders included J.P. Morgan Chase, Wells Fargo and Ally Financial and the scores were sometimes 20 too high or too low, which could affect interest rates or make some applications be declined.
The errors took place between the middle of March and early April, and Equifax has said it fixed the error, which it said was a “technology coding issue.” Equifax added that the error didn’t change information in consumer credit reports.
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