Equifax CEO forced out as company execs suspected of insider trading

UPDATE — 10/2, 5:46 p.m. EDT: Equifax revised up its estimate Monday of how many Americans were effected by the company’s data breach earlier in 2017 to 145.5 million.

Interim CEO Paulino do Rego Barros took over for departed executive Richard Smith last week.  Smith will receive a retirement package of up to $90 million, including $72 million by the end of the year.

 

Following a massive data breach at credit report agency Equifax Inc. that affected 143 million people, the company has decided to replace its CEO, Richard Smith.

Mr. Smith, a former GE executive, will be the third Equifax executive to depart since the breach; Equifax’s chief information officer and chief security officer departed on Friday, Sept. 15.  Smith will stay with Equifax for 90 days, without pay, to advise the company.

The company has also been plagued with questions surrounding insider trading. John Hamble, Equifax’s chief financial officer, along with Joseph Loughran, president of Equifax’s U.S. Information Solutions, and Rodolfo Ploder, president of business unit Workforce Solutions, sold stocks with a combined value of around $1.8 million.

Federal prosecutors are reportedly investigating the sale of company stock by the three top executives. The probe comes after a bipartisan group of U.S. senators asked the Department of Justice, SEC, and FTC to look into the matter.

Equifax has stated the officials “had no knowledge that an intrusion had occurred,” and the company would continue to cooperate with lawmakers.

“These errors are not due to wild unknowns in emerging technologies. The errors are basic management missteps in intelligent data management and crisis response,” said Jeffrey Sonnenfeld, Yale School of Management’s senior associate dean for leadership studies. “This is a mid-sized company with a devastatingly broad reach.”

Sen. Mark Warner (D-Va.) said at a Senate hearing that the situation at Equifax is a “travesty” and the CEO’s departure does not do enough to remedy the harm suffered by consumers.

“I question if Equifax even has the right to continue providing these services, ” said Warner, who co-founded the Senate Cybersecurity Caucus.

Equifax is now facing a class action lawsuit, which includes the state of Massachusetts, as well the cities of San Francisco and Chicago.

Consumers now also have to worry about a second data breach which occurred at Sonic Drive-In after the company was informed by its card processor of suspicious activity. Millions of credit and debit card accounts were possibly affected, similar to breaches in recent years at Target and Home Depot.

Readers can check if they have been impacted by the Equifax breach by visiting the company’s website. For more information on protecting oneself from identity theft visit: FTC.gov

 

Editor’s note: This article has been updated.

 

[CNN] [AP] [USA Today] [The Hill] [Fortune] [Photo courtesy USA Today]

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