ATLANTA – A former manager at Equifax was sentenced to 8 months of home confinement, fined $50,000 and ordered to pay nearly $76,000 in restitution after pleading guilty to insider trading.
Sudhakar Reddy Bonthu bought and sold Equifax stock options before the company’s data breach was publicly announced while working as a member of the team that responded to the company’s massive data breach in 2017.
“Bonthu intentionally took advantage of information entrusted to him in order to make a quick profit,” said U.S. Attorney Byung Pak. “The integrity of the stock markets and the confidence of investors are impaired by those who use nonpublic information for personal gain.”
In the summer of 2017, hackers obtained the names, Social Security numbers, birth dates and addresses of over 145 million Equifax customers.
Bonthu was a software product manager for the Eqiufax global consumer services team, which is headquartered in Atlanta. Prosecutors said Bonthu was asked to develop a remedial data breach application for, at the time, an unnamed company. He was told the project was “high priority” with a short deadline. Even though Bonthu was not directly told that Equifax was the subject of the breach, he was entrusted with information that lead to that conclusion, according to prosecutors.
For example, he knew that the information of over 100 million people was exposed as part of the breach, including names and Social Security numbers.
On Sept. 1, 2017 Bonthu bought 86 “put” options in Equifax stock that expired 15 days later. That allowed him to profit if Equifax stock dropped within that two-week period, according to prosecutors. These trades also violated company policy, which did not allow employees to purchase option contacts in Equifax common stock.
Equifax disclosed the breach publicly on Sept. 7, 2017 and stock plummeted the next day. Bonthu exercised his put options and took in a profit of over $75,000.
Bonthu was sentenced to 8 months of home confinement, fined $50,000 and ordered to pay $75,979 in restitution.