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posted by Fnord666 on Tuesday July 02 2019, @08:31AM   Printer-friendly
from the do-the-math dept.

Submitted via IRC for Bytram

Former Equifax employee sentenced for insider trading

Jun Ying, the former Chief Information Officer of Equifax U.S. Information Solutions, has been sentenced to federal prison for insider trading.

"Ying thought of his own financial gain before the millions of people exposed in this data breach even knew they were victims," said U.S. Attorney Byung J. "BJay" Pak.  "He abused the trust placed in him and the senior position he held to profit from inside information."

"If company insiders don't follow the rules that govern all investors, they will face the consequences for their actions. Otherwise the public's trust in the stock market will erode," said Chris Hacker, Special Agent in Charge of FBI Atlanta. "The FBI will do everything in its power to stop anyone who takes unfair advantage of their insider knowledge."

[...] On Friday, August 25, 2017, Ying texted a co-worker that the breach they were working on "sounds bad.  We may be the one breached."  The following Monday, Ying conducted web searches on the impact of Experian's 2015 data breach on its stock price.  Later that morning, Ying exercised all of his stock options, resulting in him receiving 6,815 shares of Equifax stock, which he then sold.  He received proceeds of over $950,000, and realized a gain of over $480,000, thereby avoiding a loss of over $117,000.  On September 7, 2017, Equifax publicly announced its data breach, which resulted in its stock price falling.

Jun Ying, 44, of Atlanta, Georgia, was sentenced to four months in prison to be followed by one year of supervised release, ordered to pay restitution in the amount of $117,117.61, and fined $55,000.  Ying was convicted on these charges on March 7, 2019, after he pleaded guilty.

Also at The Verge and DARKReading.


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  • (Score: 1) by khallow on Wednesday July 03 2019, @04:45AM

    by khallow (3766) Subscriber Badge on Wednesday July 03 2019, @04:45AM (#862606) Journal

    The problem with insider trading is that it ruins the market.

    What is ruined about the market? We already know that stock markets have participants with very widely different levels of skill and knowledge. Second, one of the key purposes of markets is to efficiently transfer information (obviously of the sort related to what is traded on the markets). When insiders are kept from trading on the market, they're also kept from revealing the information they know.

    However, insiders know more than outsiders do. As such, insiders sell things when they are overpriced, and those without that inside information know that. Therefore, no buyer is going to buy any stock in a company, because they know it's overvalued. Therefore the market collapses.

    The obvious rebuttal is 1) insiders are lean on capital - the company wouldn't be publicly traded in the first place, if the insiders had enough capital for all their schemes, and 2) insider knowledge is not perfect knowledge - it can be deeply flawed in ways that underprice a stock's price.

    because the buyer can work off the understanding that they have as much information as the seller,

    It would be a mistake to do whether or not insider trading is considered illegal.

    A big problem with this whole scheme is that it shifts wealth to the parties who can get away with insider trading despite its illegality.