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Monday, September 18, 2017

Emboldening White Collar Criminals

In 2002, hot on the heels of the most aggressive deregulatory moves in fifteen years, the Bush Administration opened the doors for egregious risk taking and poor bookkeeping by three large corporations: Enron, Tyco, and WorldCom. While the CEOs were punished with fines and brief jail time, the deregulation continued on for years -- until everything came crashing down in 2007.

Jump ahead another decade and here we are in 2017 with the broadest financial scandal in history, one that brings back memories of Enron. The Equifax data breach affected 143 million American consumers -- largely because someone thought it would be a good idea to set the username and password for the network admin to: admin, admin respectively.

But sloppy security only scratches at the surface.  Apparently Equifax had been hacked twice, with the most recent hack coming in March 2017, nearly six months prior to their news release. What took them so long to announce the hack? Equifax executives were busy dumping $1.8 million in their stock holdings:
It’s the stock sales by several executives that are likely to get the most scrutiny in light of the new timeline. On Aug. 1 and Aug. 2, regulatory filings show that three senior Equifax executives sold shares worth almost $1.8 million, with none of the filings listing the transactions as being part of scheduled 10b5-1 trading plans. Equifax’s Chief Financial Officer John Gamble sold shares worth $946,374; Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099; and Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock.
And from today's Twitter Moment: 
This goes beyond insider trading.  Doing the math, those three executives sold out 143,000,000 people to avoid losing $235,000 in stock value.