Three people have been accused of trying to illicitly profit from their knowledge of a huge data hack that affected 15 million Britons.
US authorities charged finance manager Ann Dishinger, her partner Lawrence Palmer and his brother Jerrold Palmer with illegally trading Equifax’s shares after they found out about a 2017 hack at the company but before the news was released to the public.
The SEC said one of those engaged in a share trading scheme used a codeword inspired by the 1987 film Wall Street.
Cyber criminals acquired the personal details of 143 million people from Equifax in a hack in 2017. 15 million of those affected were British.
Ms Dishinger worked at a public relations firm hired by Equifax to handle the fallout from the security breach. She heard about the hack through colleagues before it was publicly announced.
The US Securities Exchange Commission, a stock market regulator, alleges she tipped off her partner Lawrence about the upcoming announcement.
Lawrence “contacted a former business client” to buy out-of-the-money put options on Equifax “with the understanding that the client and L. Palmer would split any trading profits obtained”, said the SEC.
Prosecutors claim Lawrence “later reimbursed the client by [cheque] for the purchase cost of the options, scribbling in the cheque's memo line the words, ‘Blue Horseshoe’”.
“Blue Horseshoe” was a phrase used by Michael Douglas’ film character Gordon Gekko in the film Wall Street to disguise insider trading.
In the movie, corrupt financier Gekko calls a young stockbroker and orders him to buy shares in a steel mill, saying: “Then call the Wall Street Chronicle, extension 1605. You tell the man Blue Horseshoe loves Anacott Steel.”
Jerrold is said to have told an old friend about the upcoming Equifax announcement, striking a similar deal to buy put options on Equifax and split the profits.
Put options mean a trader can sell shares at an agreed price before a given date. Equifax’s share price crashed by a third after the hack was announced in February 2020. The Palmer brothers allegedly made profits of $100,000 (£83,000) between them from the trading scheme.
Both the Palmers agreed to pay a US stock market regulator about $100,000 each to settle the charges without admitting liability. Ms Dishinger is contesting the charges and the SEC case against her continues.
Four members of an elite Chinese military hacking unit were charged, in absentia, with carrying out the 2017 hack. Prosecutors said they spent weeks hunting for and stealing personal data on millions of people from Equifax’s systems, in what US attorney general Bill Barr described as an “organised and remarkably brazen” operation.
Equifax settled lawsuits over the breach for $700m (£542m) in the US, while the Information Commissioner’s Office in the UK fined it £500,000, the largest fine it could issue at the time.