A former Equifax employee agreed to settle SEC charges of trading on material nonpublic information. The case is similar to one brought earlier this year against a former Equifax business unit Chief Information Officer. It is the second insider trading case stemming from the company's 2017 cyber breach.

According to the SEC Complaint, a manager of software engineering at Equifax was assigned to what was described as an internal Equifax crisis action team for an unnamed client that had experienced a data breach. The employee was able to deduce that Equifax itself was the victim of the breach, despite the fact this information had not been released publicly. Armed with this information, the employee used his wife's brokerage account to purchase out-of-the-money put option contracts for shares of Equifax common stock, in violation of Equifax policy that prohibited any trading in derivative securities. Immediately following the public announcement of the breach, Equifax common stock dropped nearly 14% per share from the prior day's closing price. The employee then sold his Equifax put option contracts, converting his initial investment of $2,166 into $77,333.

The employee was ultimately terminated by Equifax for failing to cooperate with an internal investigation into whether he had violated the company's insider trading policy.

In order to settle the SEC's civil charges, the employee agreed to a permanent injunction from violating federal securities laws and to disgorge his profits obtained as a result of the alleged insider trading. He also faces criminal insider trading charges brought by the DOJ.

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