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Equifax Investigation Clears Execs Who Dumped Stock Before Hack Announcement (gizmodo.com)
An anonymous reader quotes a report from Gizmodo: Equifax discovered on July 29th that it had been hacked, losing the Social Security numbers and other personal information of 143 million Americans -- and then just a few days later, several of its executives sold stock worth a total of nearly $1.8 million. When the hack was publicly announced in September, Equifax's stock promptly tanked, which made the trades look very, very sketchy. At the time, Equifax claimed that its executives had no idea about the massive data breach when they sold their stock. Today, the credit reporting company released further details about its internal investigation that cleared all four executives of any wrongdoing.
The report, prepared by a board-appointed special committee, concludes that "none of the four executives had knowledge of the incident when their trades were made, that preclearance for the four trades was appropriately obtained, that each of the four trades at issue comported with Company policy, and that none of the four executives engaged in insider trading." The committee says it reviewed 55,000 documents to reach its conclusions, including emails and text messages, and conducted 62 in-person interviews. "The review was designed to pinpoint the date on which each of the four senior officers first learned of the security investigation that uncovered the breach and to determine whether any of those officers was informed of or otherwise learned of the security investigation before his trades were executed," the report states.
The report, prepared by a board-appointed special committee, concludes that "none of the four executives had knowledge of the incident when their trades were made, that preclearance for the four trades was appropriately obtained, that each of the four trades at issue comported with Company policy, and that none of the four executives engaged in insider trading." The committee says it reviewed 55,000 documents to reach its conclusions, including emails and text messages, and conducted 62 in-person interviews. "The review was designed to pinpoint the date on which each of the four senior officers first learned of the security investigation that uncovered the breach and to determine whether any of those officers was informed of or otherwise learned of the security investigation before his trades were executed," the report states.
...right
Equifax finds Equifax not guilty.
Clears Execs (not like anyone expected anything different).
So these supposedly important members of the company weren't (officially) notified or found out about this July 29th hack till August 10th?
I assume they were notified of the previous March hack, and how it had yet to be disclosed?
The internal investigation by Equifax cleared the Equifax executives of any wrongdoing when they sold their stock in Equifax just before the story about how Equifax was so sloppy with the personal data of millions of people who aren't even customers of Equifax that hackers were able to get all of it.
Well, I guess that settles it. Surely, if there was wrongdoing, the internal investigation by Equifax would have found it and brought the wrongdoers to justice.
Now watch me hit this drive...See that? Right in the middle of the fairway.
You are welcome on my lawn.
Any time someone says the free market can police itself, refer them to situations like this.
How about if you are an executive, then for every quarter you Pre-Enter a Sell Order assuming something bad will happen.... If you don't learn of anything catastrophic happening, then cancel or modify your sell order before it occurs and/or before it has to be reported.
Any investigation will basically always show you knew nothing about what the bad thing was at the time you created the order ----- Because it's what you knew when you failed to cancel your order as otherwise intended that matters.
It needs to stop.
About 8 years ago, I read a book called "The Battle for the Soul of Capitalism", by John Bogle, founder of Vanguard. In one of his chapters, he makes a case for ending executive stock-option compensation. The original intentions of stock-option compensation were to provide executives an incentive to perform well; as Bogle puts it, "align management's interests with those of shareholders".
But Bogle went on to explain a key difference between executives and shareholders. Executive interests are short-term, while shareholders are invested long-term. Most individuals still invest long-term, and a substantial percentage of the stock market is locked away in retirement 401k's / 403b's, or in pension account investments. That money's not going anywhere anytime soon. But executives want their salaries as big as possible, as soon as possible. So, rather than executives making business decisions with long-term interests in mind, they selfishly make business decisions that maximize short-term values with little interest in how those decisions will affect the value of the company beyond the sell date of their stock compensation, 401k's be damned.
And that's why we need to end stock-option compensation.