U.S. Sen. Tim Scott, R-SC, implied Equifax executives may have violated federal insider trading laws by selling their stocks in the company less than 48 hours after its CEO learned about a massive data breach.
Scott was among those senators who questioned Equifax executives Wednesday during the Senate Committee on Banking, Housing and Urban Affairs. Specifically, he focused his time on Equifax executives who sold their shares of stock in the company before going public with the breach.
Scott questioned former Equifax CEO Richard Smith on the timeline, particularly three high-ranking officials who sold their shares 48 hours after Smith first learned about the breach, which ended up affecting more than 145 million people. Equifax did not go public about the hack for six weeks.
“All the folks in the executive suite… were the luckiest investors on August 1, to sell the stocks at the best price,” he said with a hint of sarcasm. “To net $655,000. This was pure luck and nothing else?”
Smith testified that executives had no knowledge of the breach’s extent when they sold their stock. “It’s not like the suspicious attack that occurred on (July) 29th and the 30th was the first of that year, of that month,” he replied. “Suspicious attacks occur all the time.”
Scott told Smith that he found it hard to believe his side of the story. “What y’all want us to believe… is that the three luckiest investors who sold their stock did so without any knowledge that the suspicious activity may be bigger and more powerful than any suspicious activity in the history of the company?” he said. “I find that hard to believe.”
The Justice Department is investigating whether the three Equifax executives violated insider trading laws by selling the stock. Federal law prohibits individuals from making decisions on investment buys or sells based on information which is not publicly available.