"Somebody Goes To Jail" - Senator Says Equifax Execs Should Face Criminal Investigation

Little more than a day after Equifax disclosed that hackers had infiltrated its cybersecurity systems and “compromised” the personal data of 143 million Americans, the company was hit with its first class-action lawsuit, which alleged that the company could’ve prevented the breach if hadn’t instead opted for negligent cost-cutting.

That suit, seeking $70 billion, was filed by Mary McHill and Brook Reinhard in a Portland, Ore. court.

“In an attempt to increase profits, Equifax negligently failed to maintain adequate technological safeguards to protect Ms. McHill and Mr. Reinhard’s information from unauthorized access by hackers,” the complaint stated.

 

“Equifax knew and should have known that failure to maintain adequate technological safeguards would eventually result in a massive data breach. Equifax could have and should have substantially increased the amount of money it spent to protect against cyber-attacks but chose not to.”

While the Equifax breach wasn’t the largest-ever in terms of the sheer number of customers affected, it will probably be remembered as one of the most damaging. Among the sensitive data, hackers absconded with social security numbers, credit card and banking information – considered the most valuable to fraudsters and identity thieves lurking on the dark web. Compounding the public’s outrage is the fact that the company had known about the hack for a month before it was disclosed, allowing its executives to cash out $2 million in stock.  

And less than a week after the breach – which occurred between mid-May and July – was disclosed, it appears that the Portland lawsuit was just the first crack in levee. Since then, more than 30 lawsuits have been filed in the United States against Equifax Inc., according to Reuters.

Some have alleged securities fraud, accusing the company of misleading shareholders to benefit insiders.

“At least 25 lawsuits had been filed in federal courts by Sunday, including at least one accusing the company of securities fraud, court records show.

 

Several more lawsuits were filed against Equifax on Monday. Many of those raising similar claims will likely be combined into a single, nationwide case.”

“In the securities fraud lawsuit, Equifax was accused of misleading shareholders about its ability to protect consumer data, inflating its financial statements and share price before the truth became known.”

Another criticized the company’s (meager) offering of free credit monitoring for a year for consumers who were affected, as plaintiffs cynically accused the company of taking advantage of a catastrophe to try and upsell customers.

“Some lawsuits criticized Equifax’s offer of a year of free credit monitoring with its TrustedID product. One complaint filed in San Jose, California, suggested that Equifax might do this to lay a “foundation” to pitch costlier services. It cited a Feb. 22 regulatory filing in which Atlanta-based Equifax said more companies are offering free or low-cost services such as credit scores, reports and monitoring “as a means to introduce consumers to premium products and services.”

And now, in what’s perhaps the most portentous development for the company and its executives, at least one US senator has called for a criminal investigation into Equifax’s corporate leadership.

According to Reuters, Senator Heidi Heitkamp, a Democrat who sits on the Senate Banking Committee, said it was “disturbing” that it appeared executives sold their stock before disclosing material information to the public.

“If that happened, somebody needs to go to jail,” Heitkamp said at a credit union industry conference in Washington. “It’s a problem when people can act with impunity with no consequences. How is that not insider trading?”

Whether or not this happened, the truth will likely be known soon enough. On Monday, Senator Orrin Hatch, who chairs the Finance Committee, and ranking Democrat Ron Wyden, demanded that Equifax Chief Executive Rick Smith provide a timeline of the breach and its discovery. Equifax said it had learned of the hack on July 29.

On Aug. 1, just three days later, top company executives, including Chief Financial Officer John Gamble sold Equifax shares or exercised options worth about $1.8 million, according to regulatory filings.

The company has said the executives weren’t aware of the breach when they sold their shares. But the timing certainly is curious…

Public sentiment toward Equifax is so toxic, that one programmer is repurposing a bot he released in July to make it easier for affected parties to sue the company, according to the Verge.

“The DoNotPay bot – as it’s known - is mainly used for helping with parking tickets. But with this new update, its creator, Joshua Browder, who was one of the 143 million affected by the breach, is tackling a much bigger target, with larger aspirations to match. He says, ‘I hope that my product will replace lawyers, and, with enough success, bankrupt Equifax.’”

Of course, the fact that such a devastating hack was carried out against a company whose sole job is safeguarding consumers against fraud is absurdly ironic. In a way, it mirrors the irony of ratings agencies, tasked with deciding the creditworthiness of fixed-income products, stamping incredibly risky bonds with triple AAA ratings.
 

Comments

Stuck on Zero YUNOSELL Tue, 09/12/2017 - 23:07 Permalink

On so many levels it's inconceivable that anyone could walk away with so many valuable records. A properly managed system would literally have hundreds of protection mechanisms. Dual linked records, limited access rates, sniffers, poisoned lists, and SNORT machines everywhere. It's not hard to protect such a database.

In reply to by YUNOSELL

Rapunzal H H Henry P P … Tue, 09/12/2017 - 22:39 Permalink

All the bankster criminals who are causing the crashes and inflation will never go to jail. If corzine the swine got Scott free by stealing from segregated accounts, being Obamas best buddy. No one on Wall Street will go to jail. It's an organized crime syndicate with the laws written for them. Watch out for the next crash, you won't get any of your money, not even from your savings account.

In reply to by H H Henry P P …

Lets Buy The Dip H H Henry P P … Tue, 09/12/2017 - 22:53 Permalink

i like this take from ST newsletter  ==> http://bit.ly/2hHfN90"This is crazy of equifax, first the banks organize the subprime crisis, then make huge profits bettign against it, knowing it would fail, and now this! "This is probalby the most illegal thing we have seen since 2008.....and guess what there, will be more of it, and guess what, furthermore, no one will go to jail for it. OH....the SHOCK and HORROR....help me jesus.... LOLWhat a world in which we live.  

In reply to by H H Henry P P …

silverer Tue, 09/12/2017 - 22:21 Permalink

Must be money in this for the government somewhere for them to come out like this. Consumers, the ones who got bent over and done up, won't see a red cent.

Sliced into ribbons Tue, 09/12/2017 - 22:21 Permalink

Equifax had better give their CEO a huge bonus to make sure he sticks around to clean up this mess. Also a bunch of stock options since the stock has tanked so they will be worth a lot more in a few years.

Dickguzinya Tue, 09/12/2017 - 22:27 Permalink

Not in this country babe.  In society today, the cream no longer rises to the top.  Social engineering has propagated an environment where unscrupulous, insouciant, low lives have risen to power, with impunity every step of the way.  And when you have a milquetoast USAD, like Jeff Sessions, all bets are off.  Unfortunately, the status quo will continue to reign supreme.  Hey Jeff!  Could you at least indict lois lerner and kosskinen from the IRS.  For fucks sake, what are you doing in your office all day, with the plethora of manpower and purview that has been bestowed upon you?

SixIsNinE Dickguzinya Wed, 09/13/2017 - 01:56 Permalink

alright alright already - youse threes need to get a room!~Dickguzinya, American Snipper & Yukon Cornholius - who ever makes it out alive tomorrow to report in the ZeroLounge and we'll let Connecting the Dots decide the winner.Winner gets to be a contestant in Lucky Larry's "Pull It!" throwback gameshow - as each contestant removes a supporting column from a Twin Tower Replica before it gets too dicey they bang the giant button and yell out to Lucky Larry, "Pull it! Larry!"  Geeez, you'd think HH PPPPP Paulson Honorablee Righteous Poobah himself was here tonight! 

In reply to by Dickguzinya

American Snipper Tue, 09/12/2017 - 22:29 Permalink

Yet that fucking cunt let every piece of shit swamp creater from Obama to Hillary, to Lois Lerner, to Susan Rice, Comey, Clapper, to Eric Holder, or the fat black cunt that took his place, can't recall her name, go scott free, and you toss a navy private who takes a selfie in an engine room in jail an toss him out of the army. Dems and fucking Rinos are pieces of shit traitors to the republic and its time for one of those parties to die like the Whigs mid 1800s, and have Trump go Independent or a new one, the American party.

SixIsNinE Dickguzinya Wed, 09/13/2017 - 02:01 Permalink

don't look now, but the senate chambers have been retrofitted with senator-changing Depend stations, painted to resemble marble columns where aides can change the Senators' depends quickly and deftly on the fly with minimal displeasure to the lucky Senators.the John McStain changing station already has a brass plaque honoring the war hero ... paid for by the actress Jennifer Lawrence, said to be a descendant of the noble Lawrence of Arabia and god=daughter of war-weary reporter Brian Williams, recipient of Reporters Purple Heart. 

In reply to by Dickguzinya

Rebelrebel7 (not verified) Tue, 09/12/2017 - 22:30 Permalink

Excellent! This will set Starre Decisciss precedent for imprisoning everyone in the government for the IRS and Veterans Administration hacking identity theft! Yes! We won! No more swamp!

Identify as Ferengi Tue, 09/12/2017 - 22:30 Permalink

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They never claimed to be fiduciary. So their leverage is twistin' arms. Who don't?