Former Equifax CIO sentenced for insider trading

https://www.justice.gov/usao-ndga/pr/former-equifax-employee-sentenced-insider-trading

by arkadiyt • 7 years ago

121 76 7 years ago

blitmap• 7 years ago

Dude "earned" ~1.5 million exercising his stock options and acting on insider knowledge. He gained $500k and sold before the stock fell. He has to pay back about $175k and go to jail for 4 months.

Am I reading this right?

Keep doing what you're doing, Ying.

Zombieball5• 7 years ago

If I was a CIO of a large company, I would not spend 4 months in jail just to gain $500k extra. Not worth it.

StudentStuff• 7 years ago

He cashed out $1 million in shares not knowing if these shares would become near worthless shortly after selling them. Considering it was a $175k fine, he eliminated serious risk to his personal finances.

Many rational people would do what this CIO did given this minor fine and brief prison sentence.

ergocoder• 7 years ago

Yeah, not really worth it.

A rank-and-file engineer at Google already earns $200k to $500k.

This is a C-level at a large company. I'd say $500K isn't much.

Very dumb decision by CIO, to be honest.

stefan_• 7 years ago

The difference to selling his options after the data breach was only 117k, though. That was the profit through insider trading.

avip• 7 years ago

... in retrospect.

nilkn• 7 years ago

He lost his career and all subsequent earnings, which would have been substantial at the C-level executive tier. He’s only ~42 — this loss of earnings will vastly exceed a small $500k payday at that career level. And we don’t see the probably astronomical figure he paid in legal fees. I find it very hard to believe he actually would consider this an optimal investment strategy.

4ntonius8lock8• 7 years ago

This logic literally applies to everyone going to jail.

It's not like C level people are some blue blood creature that feels the consequences of a criminal record differently than the rest of us.

beering• 7 years ago

I think that's not an accurate description. He avoided $117,000 in losses by trading on inside info. The gain is just sale price - purchase price. If he hadn't traded on insider info, he would've been able to gain $500k - $117k since Equifax stock did not go below his purchase price.

So he had to pay back what he avoided losing plus $55k, plus serve time. I think the monetary fine is pretty low, but the gov't is not stupid - they made sure he came out negative.

mikeash• 7 years ago

I don’t know if I agree with the “not stupid” part. It may have worked out this time but there are many examples where the fine is less than the gain.

Although those examples are often less about stupidity and more about not wanting to actually punish.

alasdair_3• 7 years ago

He has to pay back about $175k and go to jail for 4 months.

He also lost his job, has a felony conviction that will harm his ability to find another one and likely paid a fuckton in lawyers fees that exceeded any gain he made.

Not saying this was a fair sentence - I think it was lenient - but the top of the line number isn't the whole punishment.

koolba• 7 years ago

He also lost his job, has a felony conviction that will harm his ability to find another one and likely paid a fuckton in lawyers fees that exceeded any gain he made.

Harm is too soft a word. It’s down right impossible to get a job in a regulated industry with a felony conviction.

true_tuna4• 7 years ago

Don’t you know by now that the American legal system doesn’t punish the rich and powerful?

4ntonius8lock8• 7 years ago

I know it's a plea deal, but:

Reward: $1,000,000~ Profit

Potential Cost When Caught: Restitution $117,117.61 + $55,000 Fine + 4 Months Jail Time

Odds of Getting Caught: ?

I feel the ? part is probably pretty low. Like single digit low.

Seems like pretty bad disincentive. Especially when compared to how we disincentive petty things like shop lifting. How much more egregious will our legal system get?

esoterica2• 7 years ago

Read the article again, the profit was $117k, not $1m.

4ntonius8lock8• 7 years ago

He cashed almost $1m.

He WOULD have lost $117k. So after all the chips fell, that was his ill-gotten amount.

But he didn't know that at the time. He knew the stocks were going down. How much is anyone's guess. The externalizations of their failure are a multi billion dollar matter. It wasn't a small issue. There was a real potential their stock would plummet.

From his perspective at the time, he was getting almost $1m, which he might not get otherwise.

Furthermore, the reason for the stock going down in the first place was HIS fault. He was the CIO. The information leak was directly on his shoulders.

jtdev2• 7 years ago

4 months!? The sentencing of white collar crimes in the U.S. juxtaposed to drug offenses and crimes of desperation should make us all question the legitimacy of our legal system.

ryanlol6• 7 years ago

OTOH insider trading while "unfair" doesn't necessarily hurt anyone.

(not that the crimes you mentioned necessarily hurt anyone either)

pessimizer• 7 years ago

Only if nobody bought that stock.

z3c04• 7 years ago

The problem here is the disproportionate amount of "disincentive" occurring - in this case Ying is basically making around $500k to spend 4 months in prison. If somebody pitched that idea to me on its own, I'd at least put some thought into it.

Drug offenders often get punished so disproportionately for their crime that they're unable to take advantage of systems that would help them improve their lives after their multi-year prison sentences (jobs, college, travel, etc.) They certainly aren't going to have a few hundred thousand dollars waiting for them when they got out.

This is clearly anecdotal, but a family member of mine - who was imprisoned for 4 years in work camps over a drug offense - was given $35 and a "good luck".

Edit: By the way, his career was ruined the moment he became accountable for one of the worst data breaches in history - this conviction isn't what ruined his career as a CIO.

puranjay• 7 years ago

You have to ask who exactly gets hurt if some guy sells a few grams of weed to some bored college kid.

rolltiide• 7 years ago

Get charged with larceny and see what happens

Go over $500 and get charged with grand larceny and see what happens

As Nancy Botwin said on Weeds “maybe your people need to steal bigger”

Since it wont be called stealing if its big enough

nojvek2• 7 years ago

Well, how many non-white people do you see in Congress and important seat positions. The bias is very real.

m-p-3• 7 years ago

He surely learned to be more careful next time or risk getting a slap on the wrist again.

jjeaff4• 7 years ago

He had to pay back everything he earned due to the insider trade plus $55k in fines. Plus prison for 4 months and a permanent criminal record. Doesn't sound like a slap on the wrist for trading on inside information.

But I don't disagree that lots of other crimes are way overcharged.

alaithea2• 7 years ago

This is doubly ridiculous. As CIO he ought to be held accountable for the loss of millions of people's personal data. Instead, he gets what amounts to a slap on the wrist for insider trading.

4ntonius8lock8• 7 years ago

The really crazy part is, a significant percentage of American's find this fine.

You'll even find a large number of comments here defending the sentencing saying 'but he will lose his job'. As if that doesn't happen to everyone else convicted of crime.

dragonwriter2• 7 years ago

You'll even find a large number of comments here defending the sentencing saying 'but he will lose his job'. As if that doesn't happen to everyone else convicted of crime.

It does not, in fact, happen to everyone else convicted of a crime.

DawgFedora2• 7 years ago

He wasn’t the global CIO, he was the CIO of a business unit, and the application that was exploited in the breach was NOT under his department.

I worked for him when this happened - he was a smart guy who happened to guess right. He hadn’t been informed of the breach when he traded his options, he just make an educated guess based upon things happening. I don’t think it was right, but it definitely wasn’t malicious. The company could have closed the trading window which would have prevented it.

The worst thing for him is that he would have been made the global CIO if he hadn’t cashed in his options. The money in this transaction is peanuts compared to what he lost there.

Edited: app was NOT in his dept

alaithea2• 7 years ago

What you are calling an "educated guess" is basically the definition of insider trading.

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[.]

sverige• 7 years ago

All that money apparently paid for good lawyers, and the social connections he probably has didn't hurt either. It's a lot better to be rich than poor of you're going to commit crimes.

philshem2• 7 years ago

The following Monday, Ying conducted web searches on the impact of Experian's 2015 data breach on its stock price.

This is the most embarrassing part. CIO’s gotta know better.

true_tuna4• 7 years ago

If the guy had any infosec sensibilities the breach wouldn’t have happened the way it did to begin with.

aj7• 7 years ago

This is why financial crimes above a certain value, say $2M, need to be CAPITAL offenses. I know this sounds crude. To bankers, and other white-collar types, cruel and unusual. But for these highly educated types, used to calculating probabilities, we have to add the possible risk of unlimited loss. For the already affluent possible scofflaw, this would act as a powerful deterrent.

Gibbon1• 7 years ago

I wouldn't go that far but I think minimum jail time of 1 day per $1000 would be 'fair enough'. $2M would net you five and a half years in jail.

Zhenya• 7 years ago

This is brilliant. Let the criminals do the math and figure out what their time is worth. In this case 500k for 4 months is a joke.

bariswheel• 7 years ago

long bitcoin, short the banks.

fnord77• 7 years ago

all to avoid $117,000. A measly amount for someone making C-level money. His biggest punishment is that his career is ruined.

Former Equifax CIO sentenced for insider trading

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