A former Equifax manager who profited from a data breach that exposed the financial information of 145 million consumers in the summer of 2017 will be sentenced in October.
Sudhakar Reddy Bonthu of Atlanta pleaded guilty to a charge of insider trading based on his purchases of options ahead of Equifax’s public announcement of the data breach on July 23.
U.S. District Judge Amy Totenberg will sentence Bonthu Oct. 18, at 2 p.m.
U.S. Attorney Byung J. “BJay” Pak said Bonthu violated the law when he used his knowledge of Equifax’s data breach – in which hackers acquired consumers names, Social Security numbers, birth dates and addresses – to enrich himself.
“Our office will continue to investigate and prosecute those who take advantage of their positions for illegal gain,” Pak said.
Investigators say that Bonthu, a software development manager for Equifax’s Global Consumer Services, was tapped by his employer on Aug. 25, 2017, to respond to the data breach ahead of its Sept. 6, 2017, announcement of the breach.
On Sept. 1, 2017, Bonthu, 44, bought 86 "put" options in Equifax stock that expired on Sept. 15, 2017, which allowed him to profit if the value of Equifax stock dropped within that two-week period.
When Equifax publicly disclosed the data breach on Sept. 7, 2017, its stock fell the next day. Bonthu then exercised his "put" options and netted a profit of more than $75,000.
Hackers were able to access Equifax’s databases through a software hole from May to July 2017. When the breach was announced, the Atlanta-based company's stock dropped nearly $40 a share to $105.04 on Sept. 22, from $141.59 on Sept. 1.
Bonthu faces up to 20 years in prison and a $5 million fine.
Bonthu, who is not a U.S. citizen, also agreed to a list of conditions including surrendering his Indian passport, travel restrictions and not trading stock of any company for which he works.
If he violates any of the listed conditions or fails to make his next court appearance, he will have to pay $20,000.
The case is being investigated by the Federal Bureau of Investigation, with assistance from the U.S. Securities and Exchange Commission.
Richard R. Best, director of the Securities and Exchange Commission’s Atlanta Regional Office, says corporate employees cannot take advantage of their access to sensitive information and unlawfully benefit from it.
“Bonthu used confidential information to determine that his company had suffered a massive data breach and then violated company policy to illegally profit from it,” Best said.
Murang Pak, acting special agent in charge of FBI Atlanta, said company insiders must follow the same rules that govern regular investors, otherwise the public’s confidence in the stock market will erode.
“If they don’t, the FBI and its federal partners are determined to investigate them and hold them accountable,” he said.
Assistant U.S. Attorney Christopher J. Huber, deputy chief of the Complex Frauds Section, and Assistant U.S. Attorney Lynsey M. Barron are prosecuting the case.