The Securities and Exchange Commission has charged a former employee of Equifax Inc. (EFX, Financial) for insider trading as part of the data breach that exposed the personal data of more than 168 million customers.
The data breach occurred last September at the Atlanta-based company that serves as one of the leading credit bureaus in the U.S.
The SEC charged Jun Ying, Equifax's former chief information officer, with insider trading.
SEC officials say Ying exercised all of his vested Equifax stock options and then sold the shares, reaping proceeds of almost $1 million before the company disclosed the data breach to the public.
By selling out before the public knew of the breach, he avoided more than $117,000 in losses.
Stock dive
In Wednesday afternoon trading, shares of Equifax stood at $123.48 a share, down 0.21%.
In late September, the stock cratered to nearly $90 a share from a high of more than $140 a share.
In the last year, it has lost 9%. Year to date, it is up 3%.
The stock is still somewhat overpriced, according to the Peter Lynch chart, which shows a median value of roughly $72 a share.
Investigation ongoing
The U.S. Attorney’s Office for the Northern District of Georgia also announced a parallel criminal investigation against the Equifax employee who is accused of insider trading.
Meanwhile, the SEC investigation is ongoing.
Richard R. Best, director of the SEC’s Atlanta regional office, said today in a prepared statement that the Equifax employee had used confidential information to “conclude that his company had suffered a massive data breach, and he dumped his stock before the news."
Corporate insiders who learn inside information, such as information about cyber intrusions, “cannot betray shareholders for their own financial benefit,” he wrote.
Hard at work
Equifax has been hard at work to notify victims of the breach. Just two weeks ago, the company said it had confirmed the identities of another 2.4 million U.S. customers who had not yet been notified that their personal information had been compromised.
The customers had not been notified because their social security numbers had not been stolen. Rather, what was stolen was the customer’s partial driver’s license information.
Over several months, the company has conducted a forensic examination of the incident, analyzing the names of persons whose information had been mishandled.
Investigators said the attackers were predominantly focused on stealing social security numbers.
Equifax financial figures
Equifax has a market cap of nearly $14 billion.
GuruFocus ranks the company 6 out of 10 in financial strength and 8 of 10 in profitability and growth. A lesser rank on the financial strength, in part, points to the company’s debt load.
However, the company’s cash and cash equivalents have ballooned over the years to more than $336 million in 2017, compared to the prior year’s $129 million.
Equifax has seen a revenue growth per share of 7.60% over the last 10 years. The company also reports a steady stream of earnings per share over the last 15 years. In 2017, earnings per share reached just under $5, up after sitting at $4 the prior year.
Its operating margin has hovered around 20% to 25% over the last 15 years. In 2017, it reported 24.53%. Gross margins have climbed to nearly 64% compared to 58% in 2003.
The company’s long-term debt has been steadily rising over the years. It took a jump in 2007 when debt reached over $1 billion compared to the prior year’s figure of $174 million. The company’s debt stood at $1.7 billion, a drop from the prior year’s $2 billion.
The company’s dividend yield has gradually risen to 1.32% in 2017.
