Former Equifax manager sentenced for insider trading
ATLANTA - Sudhakar Reddy Bonthu, a former manager at Equifax, was sentenced today after pleading guilty to insider trading. Bonthu bought and sold Equifax stock options before Equifax’s data breach was publicly announced, while working as a member of the team assembled to respond to the company’s massive data breach in 2017.
“Bonthu intentionally took advantage of information entrusted to him in order to make a quick profit,” said U.S. Attorney Byung J. “BJay” Pak. “The integrity of the stock markets and the confidence of investors are impaired by those who use nonpublic information for personal gain.”
“If we don’t hold company insiders to the same rules that govern regular investors, the public’s confidence in the stock market erodes,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “The FBI will do everything in its power to hold accountable those who choose to take advantage of their inside knowledge.”
According to U.S. Attorney Pak, the charges and other information presented in court: Equifax Inc. is a consumer credit reporting agency headquartered in Atlanta. During the summer of 2017, Equifax was the victim of a data breach, where hackers acquired names, Social Security numbers, birth dates, and addresses of over 145 million consumers. Sudhakar Reddy Bonthu was a software product development manager for Equifax’s Global Consumer Services team in August 2017. He was asked to assist in developing data breach remediation applications for an unnamed company and was further told that the project was a high priority with a short deadline because the company intended to announce the breach publicly on September 6, 2017. Among other tasks, his primary role was to help develop an online user interface that would allow consumers to determine whether they were impacted by the breach. Although he was never directly told it was actually Equifax that had been breached, he was entrusted with information that led him to that conclusion. For example, he knew that around 100 million individuals’ information was exposed as part of the breach and that the available information included names and Social Security numbers.
On September 1, 2017, Bonthu bought 86 “put” options in Equifax stock that expired on September 15, 2017. Those options allowed him to profit if the value of Equifax stock dropped within that two-week period. These trades also violated company policy, which did not allow employees to purchase option contracts in Equifax common stock. Equifax publicly disclosed the data breach on September 7, 2017, and its stock fell the next day. Bonthu then exercised his put options, making a profit of more than $75,000.
Sudhakar Reddy Bonthu, 44, of Atlanta, Georgia, was sentenced to eight months of home confinement by U.S. District Court Judge Amy Totenberg. He was fined $50,000 and he was also ordered to forfeit $75,979.
This case was investigated by the Federal Bureau of Investigation.
Assistant U.S. Attorneys Christopher J. Huber, Deputy Chief of the Complex Frauds Section, and Lynsey M. Barron prosecuted the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.