A former Equifax employee pleaded not guilty to charges of securities fraud, which stem from the company’s massive data breach, at a federal courthouse in Atlanta Thursday.
According to court documents, Sudhakar Reddy Bonthu, a former software development manager at the Atlanta-based credit reporting company, is accused by the U.S. government of using non-public, insider knowledge of the data breach to make more than $75,000 off of trades made in September of last year.
VIDEO: Previous coverage of the Equifax data breach
The charges Bonthu faces carry a maximum sentence of 20 years in prison and a $5 million fine. The judge ordered the parties to reconvene for another plea hearing, meaning Bonthu has the opportunity to change his plea.
Equifax announced in September of 2017 it had been hacked by a still-unknown party. The hackers were able to gain access to private information, including Social Security Numbers, of 145 million Americans.
The federal government alleges that before the company publicly announced the breach, Bonthu became aware of the data exposure and bought 86 put options in Equifax stock. Put options allow the owner to make money if a stock price drops.
After the data breach was announced, Equifax stock plunged. U.S. attorneys say this is when Bonthu exercised the options, profiting upwards of $75,000.
At his arraignment Thursday, Bonthu waived his right to a grand jury indictment. U.S. attorneys had filed a criminal information, a document which charges an individual with a crime. Bonthu chose to let the information stand as the indictment.
In addition to entering a plea Thursday, Bonthu, who is not a U.S. citizen, also agreed to a list of conditions, including surrendering his Indian passport, travel restrictions and not trading stock of any company he works for.
Bonthu’s lawyer and U.S. attorneys agreed to an unsecured bond of $20,000, meaning if Bonthu violates any of the listed conditions or fails to make his next court appearance, he will have to pay $20,000.
This is the second insider trading case U.S. attorneys are pursuing related to the Equifax hack. Jun Ying, a former executive at the company, was indicted in March on charges of insider trading. Ying, whose case is still pending, is accused of dumping $950,000 in Equifax stock before the breach was announced.
Hackers were able to access Equifax’s databases from May to July of last year through a software hole. As a result of the announced breach, Equifax stock dropped nearly $40 a share on the New York Stock Exchange in less than month, falling from $141.59 on Sept. 1 to $105.04 a share on Sept. 22. Equifax stock was up to $125.23 a share as of June 28.
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